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Pay Yourself First - Money Saving Tip
If you are living with a consumer proposal it is very important to budget effectively in order to be able to make your payments. If you fail to make 3 payments your proposal is dissolved and you are right back where you started. Even after your Proposal is complete it is a good idea to develop and stick to good financial habits so you don’t find yourself with debt problems again. One good financial habit that helps you save money and spend less is known as “pay yourself first”
So how does it work?
Pay yourself first is an old financial rule that is as simple as it sounds. The minute you get your paycheque you put predetermined amount into a separate savings account; that way it is gone before you even have a chance to spend it.
The amount you put into savings is up to you. If you cannot afford a lot even putting aside something as small as 2% of your income can help create healthy financial habits. Then later if your income increases or you start to budget more effectively you can increase the amount that goes into your savings.
If you aren’t used to saving setting up an automatic transfer is a good way to go about it. This means you won’t forget to put the money in your savings and accidentally spend it all.
Why does it work?
When most people attempt to save they try and put away whatever is left over at the end of the month. This doesn’t work for a variety of reasons, there are always discretionary expenses and all of a sudden there isn’t anything left to save. Setting your budget up this way also suggests that saving is your lowest priority. With that mindset it is easy to let it slip for months at a time.
When you pay yourself first you make savings and investment in your future a priority. You also remove that money from the path of temptation. If it isn’t there to spend then perhaps you won’t buy that new nail polish or stop for coffee on the way to work.
This is a simple rule, but it is a great money saving tip, especially for people who have struggled to save in the past. It is a great financial habit to develop.
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