“Pay yourself first” is a financial strategy which refers to consistent savings or investment prior to other activities after you have received your monthly income. It is being an automatic routine from each paycheck before paying other living expenses.
The goal of “pay yourself first” strategy is to ensure you always have enough money to contribute savings and investment in order to receive greater value in the future.
The “pay yourself first” strategy has also been well recognized by many personal finance professionals as the golden rule. Finance professionals believe it is being a very effective way to reach your saving goal. By putting income into savings or investment prior to other spending, you are able to make sure you are investing in consistent amount of fund for your future. Now, let us look at some ways you can use for saving and investing.
According to the data from the Federal Reserve, many Americans are not saving enough money for either retirement or emergency fund. At the meantime, there are several ways you can choose to proceed the “pay yourself first” method depends on your personal financial objective.
If you are saving for your retirement, you may use this “pay yourself first” method by contributing a portion of your income into your retirement account such as 401(k).
Besides saving for your retirement, you may also want to save for an emergency fund in case some unexpected spending happen in the future. More than that, you can also save for buying a property or college tuition fees for your children. For such savings, you can simply open a cash savings account and break down the amount of money you need to achieve your financial goal.