For a good portion of my life, I looked at each payday as a time to pay my bills instead of saving money. I would tell myself I would save what was left over, but usually that didn’t happen. So I forced myself to save money before I paid my bills. This is called “paying yourself first.” In this article I provide 3 pay yourself first examples I used to save more money. Let’s go!
Pay Yourself First Examples: Start Small
The best way I found paying myself first was to start small. On payday I opened my bank account app in the morning, verified my paycheck was in my checking account, and then transferred money from that account into my savings account. At first, the amount was $50. Then next payday I increased the savings to $100. And it kept growing.
For many people, they want to start big and save $500 from their paycheck. While that intention is fine, the execution isn’t. Many American live paycheck-to-paycheck and they do need to pay their bills. So what usually happens is a person pays themselves too much money and then either uses a credit card to pay the bills, or has to remove some of that money from savings. In the end, if you can only pay yourself $25 or $50 each payday, that’s better than nothing.
Pay Yourself First Examples: Learn To Live On Less
One of the pay yourself first examples many people tend to learn over time after putting this into practice is learning to live on less money.
Now, this lesson isn’t easy for some people as some they think they are depriving themselves. I do concede everyone should give themselves some “fun money,” but we shouldn’t get comfortable living like the grasshopper from Aesop’s Fable, “The Ant and the Grasshopper.”
Now I will say I do still get uneasy when I pay myself first. “I don’t have that much money leftover,” I say. But then I take a look at my upcoming expenses, do some quick subtraction and realize, yes, I do have money leftover to live and enjoy myself.
You will go through this slight panic too, and it may stop you from paying yourself first. Fight that feeling!
Pay Yourself First Examples: Develop A Goal For Your Money
When you pay yourself first you should have a goal for your money. Saving money just to save it isn’t a goal because you may end up spending it later. However, if you mark your money for a potential vacation or for a downpayment for a house, you are less likely to spend it.
After determining your goal, think about it every time you pay yourself first. Me? I named one of my savings accounts after my goal. Most banks allow you to add a nickname to a savings account. That way you are reminded each time you view it.
Speaking of savings accounts, I suggest having more than one. Most banks make it easier than ever to have separate savings accounts. This way if you have several goals in mind, you can transfer specific amounts into each account! Finally, some banks, like Ally, offer buckets:
Like digital envelopes, you can dedicate parts of your savings to whatever you want (or want to do). You can create up to 10 savings buckets that will peacefully coexist in your Online Savings Account, plus you’ll still earn interest on your total balance.
This is a great option to divide up your savings, and I highly recommend it!
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