Wednesday, March 20, 2013

Pay Yourself First

One of my goals for 2013 was to save $250 out of every pay period. In the financial community this is known as Pay Yourself First. The idea is to send money to a savings account before paying any bills or spending any money. So far I haven't missed any payments to myself this year and as you can see I went ahead and paid myself for March:


I don't really know why I'm doing this but I will say it is nice to see the money build up in the savings account. I know you think I'm an idiot when it comes to debt and money and you would never take advice from me when it comes to finances BUT please do this. Take my advice on this habit and pay yourself first. Start with any amount, it can be $20 or $100. The moment you get paid, pretend you are a pesky bill and send that money to yourself. Put the money in an online savings account or other some place where you can't touch it.

My goal is to up this amount to $500 per month in 2014 and make this a permanent habit. I may mix things up a bit and send $250 to the savings account and $250 to invest in stocks. Stocks may be more volatile but companies like McDonald's or Microsoft are not going away any time soon, the long term goal would be to wake up one day and be a millionaire.

HS

6 comments:

  1. Very True! We are doing this in the form of a retirement account, however, I think, from just today, that we should start depositing it in with the orthodontist!

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  2. Well yes, I do also set aside 15% to 401k. We also have a 403b and a 457 plan- I think those should always be on auto pilot.

    HS

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  3. That advice is equivalent to a 520 lb dude telling me to fast for 24 hours once a month to lose weight.

    Like him, you wouldn't need to do this if you lived healthy throughout the month. This pay yourself first BS is just a placebo for what you (and everyone) really need to do--be on a budget.

    Do that instead of patting yourself on the back for the band-aid you've given yourself.

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  4. well at least that dude would lose some weight lol

    I have a budget but I can't do the line item budget for every little thing..

    HS

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  5. I agree with your method completely. I got out of the habit but will get the transfer set up automatically.

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  6. So, you get paid the middle of the month? Otherwise, you AREN'T paying yourself first, you're waiting until you're sure you have the $ on hand. The money transfer should be going out the same day your paycheck is deposited.
    And, as ND Chic said, this could easily be set up as a monthly recurring payment so you don't have to remember to do it manually, and truly gets it on autopilot.

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