How to Pay Yourself Before Paying Anyone Else!

NO NONSENSE

Piggy bank jar (Photo – Steve Buissinne, publicdomainpictures.net).

I was once told, “Pay yourself before you pay anyone else.”

By Elie Boutros

Before you pay your landlord, your bank, whatever loans you have, pay your future-self first. One way you pay your future-self is if you send some money over to your savings (and keep it there).

You want to have a larger savings. But unexpected expenses always wipe out your paycheck. So you just need to make more money right? No. The truth is no matter what age, or what your income is, unplanned expenses will always come up. If you don’t know how to save now, you will never know. Think of your saving as a tax…

Send money over
to your savings
and keep it there

Imagine federal income tax increased by 5%, would you pay it? Unless you plan on moving to another country, the answer is yes. This is the mentality you need to have with your savings. In fact if your work offers direct deposit, you can request to have 5% of your paycheck go directly into your savings. In reality 5% of your paycheck is a relatively small amount. It’s a good place to start. I would argue that you won’t even notice the deduction. What you will notice is your savings account growing in 3 or 4 months later.

Emergency savings

It doesn’t matter how much money you put in your savings account. The most important thing with a savings account is you don’t go into it. This is a personal dilemma you will have to resolve. Decide what situation, or emergency constitutes accessing this money. Don’t feel guilty. The reason you have a savings is for emergencies. This savings will give you peace of mind and you might be surprised with the relief it will provide.

Elie Boutros has a Bachelor’s in Economics from CSUCI. Most of his career has been in the banking industry. His all time goal would be to one day work in developmental economics on a global scale.