Paying yourself first means that you’re making savings your number one spending plan priority. It may sound easier said than done, but putting even $10 to $25 into a savings account each paycheck will help you establish an important savings habit you can continue throughout your life. Building up savings now will enable you to pay unexpected bills or cover the cost of a necessary car repair.
As you continue to pay yourself first, you can grow your savings and establish an emergency savings fund. Over time, you can increase your contributions to savings and pay off outstanding student loans and/or credit card debt.
Here are a few tips to help you get started:
- Prioritize savings in your monthly spending plan. Make it a priority above spending for things like movies or eating out.
- Break costly habits, such as excessive clothes-buying or smoking, and save the difference.
- Shop thrift stores and garage sales for needed items. You can pick up some great bargains this way.
- Take advantage of Groupon and Living Social deals in your area for everyday items and services you currently use.
- After paying off a loan, redirect the amount of the monthly loan payment into savings—if you don't need the money to pay off another loan.
- Deposit all extra income—tax refunds, raises, bonuses, and even gifts of money you’ve received—into savings before you have a chance to spend it.
- Mail in your rebate forms. Most people fail to take advantage of this cash-back deal that can mean more money to put into savings.
- Consider benefits and salary when looking for a better job. Give preference to employers who offer generous benefits, such as employer-paid health, life, and disability insurance. If your employer provides these benefits, you save by not having to buy your own coverage.
- Sign up for automatic deposit of your paycheck by your employer, if it’s offered. You can direct the money to your checking or savings account. This is safer than cashing your check and being tempted to spend it while you have it in hand. What you don't see, you won't miss.
- Set up an automatic transfer to savings from your checking account each month. Your financial institution usually can set the date of the automatic transfer for the day (or a few days after) your paycheck is deposited. If you bank online, you may have the ability to set this up yourself.
Set savings goals for yourself. Give yourself positive reinforcement for making progress. As you meet each goal, celebrate the milestone by treating yourself to a movie with a friend or a budget-friendly dinner out.