Got confused by reading the title? Don’t worry, and we will tell you what does this mean. Paying yourself is a smart financial strategy that allows you to save some money from your income before you use it for your regular expenditures.

You might think, why should I pay myself first? The strategy helps you make long-term financial goals with your income and helps you live a disciplined and stress-free life. You can do this by opening a savings bank account for your retirement, emergency fund, or a big purchase.

Why Should I Pay Myself First?

You might wonder what paying yourself first means and why you should pay yourself first. It is a useful strategy that helps people manage their finances and save for the harder times. First, you would determine your necessities or where you would spend your income, like paying the bills, buying groceries, etc.

After figuring out what to do with your income, you pay yourself, as it is a smart strategy to save some money aside and limit your extra expenditures. The pay-yourself-first strategy helps you save money that can later be used for an emergency fund, debt payment, or tuition fee.

Setting Priorities:

Setting priorities for your future is the wisest thing to do beforehand to live a relaxed and carefree life. If you want to build wealth, it does not happen overnight, and it needs strategies and pre-planning, consistency, and discipline.

An Easy Strategy:

When it comes to strategizing and planning your finances and budgets, paying yourself strategy is easy. The set and forget it approach makes your savings and investing easier. Paying yourself first really works as a financial strategy.

Building Discipline:

Paying yourself first a fixed amount regularly helps you build a disciplined life. Building discipline not only helps you in finances but in other aspects of life as well. It may seem not easy initially, but it will get easier as time passes.

Work-Reward Cycle:

Today modern life is a repetitive cycle of work and spend cycle. If you also feel that way, you can overcome this by following the Paying Myself strategy. Paying myself will make a new cycle for you because when you earn money by working hard, you will reward yourself by saving money, which will help you in bad times.

Smart Financial Strategy:

As we have already discussed, maying yourself is a smart strategy that helps you save money without hassle and stress. You save some money from your monthly income as a reward, and rewarding yourself motivates you to repeat this habit.

Building A Strategic Mindset:

The pay-yourself strategy gives you a strategic mindset and guides you on using your funds wisely. You don’t tend to spend on unnecessary things and prioritize spending wisely and saving some money.

Moreover, it builds a saving-focused mindset where your long-term saving goals will be prioritized.

How To Pay Yourself First?

If you want to follow the pay myself strategy, you first need to open a savings bank account if you don’t have one already. A savings account helps you transfer and put some money aside when you get your salary.

Secondly, if you have an employer-sponsored retirement plan, you should contribute to this plan instead of saving your money in the bank. It will benefit you in a way that your money will be saved tax-free.

Or, you can do the following steps to pay yourself first:

• Plan how much money you want to save, which can be a percentage of your monthly or annual income.
• You can set up an automatic transfer of the desired amount to your savings account monthly. Automatic transfers allow you to edit and stop them whenever you want. Most importantly, you don’t have to worry about bank visits every other day as the whole process will be automated.
• Consider creating a budget that tells you what amount you will be left with after paying yourself first.
• Tracking the progress is another important thing to do. When you keep tracking the progress, it keeps you motivated and to be on track.

Some Common Saving Goals:

Having a goal in your mind always helps you achieve better, so here are some common savin goals that will help you save some money:

Calculate Your Income First:

Before making long-term saving goals, you should calculate your income first and your regular monthly expenses, like electricity bills, groceries, tuition fees, etc., which you must pay monthly.

When you have a calculated amount of your income, it will be easier to understand how much you can save each month or year.

Retirement

Retirement is an important goal you can set if you ask yourself why I should pay yourself first. Sooner or later, you will be retired one day, and your income will significantly reduce, but you still have to manage your expenses.

Saving some money aside will help you manage your monthly expense after retirement, and you will not have to worry about that as you can use your savings.

Emergency Fund:

Life is unpredictable; you never know when hard and bad times will knock at your door. So it is always wise to put money aside for emergencies, like paying for a big hospital, repairing your house after a natural disaster, etc.

Saving For A Big Purchase:

If you plan to buy a car, vacation, or pay a big college tuition fee, saving that big amount will take some time. So it is better to start saving little by little than worrying now.

Conclusion:

Why should I pay myself first? You should pay yourself to have a secure and happy future. Paying yourself regularly from your monthly income helps you lead a disciplined life having long-term future goals.

You can pay yourself by opening a savings account, using an automated savings method, and adding to your saved amount whenever and wherever possible, as it will give you a feeling of self-reward and motivate you to keep this habit.