Pay Yourself First to Achieve Your Financial Goals
One major and, unfortunately, common mistake that people make when it comes to their financial saving goals has to do with the order they budget their monthly cash earnings.
In this video we look at this problem in more detail, and then offer a simple solution.
When we ask people about their budget they usually say similar things in a similar order:
- Rent or mortgage
- Car and Insurance
- Utilities, Telephone, and Internet
- Netflix, Amazon, and Other Subscriptions
- And then they save what’s left
By the time they get down to the last item on the list, there’s not much income left. Often, there’s no savings at all.
To hit your savings goals you need to pay yourself first. You need to prioritize yourself and your goals.
Think of it this way: you are going to pay yourself first, then pay everybody else.
Your savings are for you, and whatever is left over goes to your landlord, groceries, the phone company, Netflix or Jeff Bezos.
Your Monthly Budget should look more like this:
- A bunch of savings and investments for yourself
- Rent or mortgage
- Car and insurance
- Utilities, telephone, internet etc
- Netflix, Amazon, and other subscriptions
There are two reasons why you should do this.
First, it ensures you hit your savings goals because you’re prioritizing them and doing it upfront before everything else.
Second, you give yourself more priority over all the services you used to pay first. In other words, you are prioritizing yourself, and that is a form of self-respect.
So how do you do this?
Figure out the amount you want to save every day, week, or month. Then, set up a recurring, automatic transfer of that amount into your savings or investment account.
Once this is set up you’ll automatically build savings, prioritizing both yourself and your goals.
Plus it’s rewarding to see the amount in your savings or investment account grow.
What are you waiting for? Write out a simple list of expenses like the example above, and then determine how much you want to save every month.
Next, login to your online bank, then set up the automated payment, and robots will take care of the rest.
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