Guest Contributor | Jun 2, 2022 | 0
Paying yourself is just as important as paying your bills
It is essential to save for the future, whether we’re putting away money for retirement, your child’s education, or a rainy day. The important thing is to stay focused. After all, we live in a consumerist world where it’s all too easy to get swept up by constant urges to have what others have.
Most people tend to spend money on ‘wants’ and leave savings for last. This is because spending is instant, visible, and tangible. The only way to make savings work for you is to pay yourself first. Otherwise, you’ll never have any money left over for future goals and opportunities.
Self-care vs. self-sabotage
Your future is just as important as the bills you have to pay now. The ‘future you’ also deserves to be looked after. Think of saving money as a method of self-care. You are affording yourself opportunities in the future, whether it’s to start a business or live comfortably when you can no longer earn a salary.
What does ‘pay yourself first’ really mean?
Paying yourself first is one of the oldest rules of personal financial planning. As soon as your salary lands in your bank account and you start paying bills, you should set money aside for savings or paying debt. How you pay yourself depends on you: You can invest a little in a savings or investment vehicle each month or transfer a set percentage of your salary to an account from which you can allocate sums to save.
Four steps to ‘paying yourself first.’
1. Invest in the ‘future you.’
The ‘future you’ deserves to be paid as much as the school fees, the phone bill, and the security alarm company. By paying yourself first, you’re mentally establishing saving as a priority. Setting aside money each month to grow your harvest of the future, so to speak, is empowering. It will help you maintain and improve your lifestyle over time and cultivate the habit of putting yourself first.
2. Empower yourself with information.
Knowledge is power and if you’re going to pay yourself first, find a method that works for you. Just as you would put a lot of research into the right exercise or health regime for your lifestyle, find a method of paying yourself first that is doable and sustainable.
3. Get financial advice.
It can be hard to know what you should focus your savings on. Of course, you may also need to save for a house or a car, but it’s important to take a holistic view of your savings. Talk to a financial adviser about your savings and financial objectives to help you strike the right balance.
4. Make your savings goals extra visible.
It is vital to have a clear vision of your savings goals, and having very clear savings goals will help. Research has proven that people who invest money with very specific goals save a lot more over the long term. It’s about retraining your mind to focus less on the now and more on the future.
Three ways to spend less:
1. The world is making it easier to get around without cash, but we should make our money more visible. We should put limits in place to help ourselves think before we spend. Try the ‘envelope method’ for a week: only spend cash you’ve budgeted for that week. You’re bound to spend less.
2. Try to curb emotional spending, for example, buying a new tech piece because you feel bored or sad. Replace that with something else, like calling a friend. It doesn’t break the bank and is way more valuable than an item collecting dust in a few weeks.
3. Try to stick to one big shop a month and only one top-up shopping trip per week—the less time you spend at the shops, the better for your bank account.
It’s important to be very honest with yourself about the difference between self-care and self-sabotage and take care of the ‘future ‘you’ by setting clear financial goals. Consider consulting a financial planner before you make any big decisions regarding your savings and investments.
For more information and advice on this topic, speak to an accredited Financial Advisor or Broker, alternatively email [email protected], with any queries.