We’ve all heard the phrase “Pay yourself first”, but what does it really mean? At its essence, paying yourself first is saving money for yourself before you give it to everyone else. I use the term “give” loosely, I am not talking about specifically charitable giving or anything like that, more anything you spend money on, be it bills, shopping, or anything else. It is a simple concept, pay yourself first, but one that a large amount of people do not follow. Why? Because it is easier to spend than save? Because it is easier to pay those who are asking for your money than give it to yourself? because it doesn’t seem like there is enough to go around? Whatever the reason, here are five concrete ways you can start getting into the habit of paying yourself first.
1. Set up an automatic paycheck deduction/savings deposit. You don’t have to start at the top to do this. Yes, we’ve heard you are supposed to save 10% of your salary but you don’t have to start there. Set up an automatic deduction out of your paycheck to go into your savings account (or an automatic deposit out of your checking into your savings) for just $25 a month. Just do it. You’ll get used to having that money automatically saved for you, and you can build it up to a bigger amount later.
2. Put one item back at the store, and deposit the savings. Before you leave the store when shopping, go through your cart and put one item back. Write down how much that item would have cost, and then when you get home, do an online transfer from your checking account to your savings account for that amount.
3. Skip your habit once, and deposit the savings. Do you have a habit that costs you money? Be it smoking or coffee or eating out or books or anything else, I’m not asking you to give it up for good. Just for one day. Refrain from your daily (or weekly) habit one time, and then deposit the savings into your savings account.
4. Sell one item, and deposit the profits. If you are like most people, there is at least one item in your house that is underutilized and you could sell for something. Use craigslist or e-bay or even a note on a bulletin board and sell one item. Just one. And deposit the profits made into your savings account.
5. Make a phone call, record the savings. What services do you have, and what might you be able to pay less for? From interest rates to insurance payments to calbe TV, look at all of your services, and identify where you might not be getting the best deal. make a phone call – and when you reduce a payment, deposit the savings.
There’s a recurring theme here, and it is for a reason. Deposit the savings. Don’t just save hypothetical money through actions – actively *save* that money concretely somewhere. And don’t stop with these ideas – this is just the springboard to get your toes wet. The more you make paying yourself first a habit, the more likely you are to do it. And the more likely you are to do it, the more times you will follow through and pay yourself first. Even little payments to yourself can over time add up. Keep that big picture in mind, and make a payment to yourself today.