This lesson will change the way you look at money. It is the best way to get ahead and lead you to being a financial powerhouse. Ok, here it is:
PAY YOURSELF FIRST.
That’s it. Simple and straight to the point. It is also easier said than done. Here are a few ways to pay yourself first…please explore these opportunities so you can get ahead and plan for your future.
Pay yourself first using pre-tax contribution
Many companies offer programs like 401(k) for saving for retirement. This is often the best way to ensure you are saving money. Most employers provide a match of some sort so you are stashing away your own money and some of the companies’ money. You won’t pay taxes on this money until it is used when you withdrawal at retirement. Plus, you can sock the money away without ever seeing it.
Pay yourself first using post-tax contributions
Many companies have other types of savings programs such a stock purchase programs (purchase stock at a discount) or even Christmas shopping accounts. Though you don’t get the tax benefits of pre-tax contributions, this is an easy way to save money as it comes out of your paycheck directly –so its automatic and occurs before you get your take home pay.
Pay yourself first using automatic saving/routing money to savings accounts, etc.
This is the first method of paying yourself first that requires some self discipline. You will need to proactively set up to have either a set dollar amount or percentage of your check routed directly to your bank’s savings account. This can usually be done online, on the phone, and often you can have this done at work –just talk to someone in human resources about setting up your direct deposit to multiple accounts.
Pay yourself first by using innovative savings programs offered by banks.
Over the past couple of years, many banks such as Bank Of America and Wachovia have created innovative savings programs designed to automatically place money in your savings account when you make a purchase with your debit card. Examples include “Keep the Change” that rounds each purchase up to the next dollar and transfers the difference from your checking to your savings. Other programs, like Way to Save, transfer $1 each time you make a purchase. Most of these programs also pay you just join these savings programs.
These are ways that I try to pay myself first….do you have any other ideas?
Photo Credit: alancleaver_2000
