“Pay yourself first” is a common financial term you may heard many times from your financial advisor. It refers to people who consistently contribute income into their savings or investment account. So, why is “pay yourself first” is important?
Let us pay attention to some numbers. A survey which was done by Bankrate would like to find out what people would do when they face a $1,000 unexpected bill. According to the result of the survey, 40% would pay the cost from savings, 15% would finance with credit card, 14% would reduce spending on other things, 13% would borrow from family or friends, 6% would take out from personal loan, 10% have no idea what to do. This result indicates that 60% of Americans do not have enough savings to cover an extra bill of $1,000.
People should realize the importance of saving. To prevent from not having enough money to pay expected bills, you may want to try the “pay yourself first” method as it is also considered to the golden rule by financial advisors.
Having enough money on your savings account can make you feel more secured. Start saving can be easy as you can only contribute a little portion of your income every month before conducting other spending. Once you start the routine, you are more likely to stay with it.
At the meantime, building savings can be exciting when you see the balance of your savings account becomes higher and higher. Money cannot buy happiness, but it is able to provide peace of mind. Therefore, you may feel more comfortable when changes and unexpected happen in life. As you have such saving habit, you are able to see benefit over time.