Paying Yourself First To Save More

Few things about budgeting sound exciting, but it’s something everyone must do, regardless of how much money they make. Financial freedom is not possible for those who don’t know where their money goes once it's earned. Additionally, you’ll never find a way to save your money if you’re not applying the most important rule of budgeting: pay yourself first. You are your most important investment, and paying yourself first is the most beneficial thing you can do for your financial future. Here’s a comprehensive guide to paying yourself first and what it means for your financial situation.

What Does Paying Yourself First Mean?

Paying yourself first means you’re putting money into your own savings account before allotting funds for anything else. Most people work within the confines of the idea they should pay their bills first, have fun second, and save what’s left over at the end of each month or pay periods. However, it’s often smarter to pay yourself first, pay your bills second, and spend what’s left over after your priorities are met. You must pay yourself to build savings, emergency funds, and to provide for retirement. If you don’t save first, you’re more likely to spend your money and not save as much as you can. Prioritize yourself above everything else, and you will reap the benefits both now and later. Paying yourself first is profitable, as your money is going back into your bank account, and you can guarantee it’s not being wasted frivolously on things that don’t matter or won’t benefit you in the long run.

Continue reading to learn how authorized transactions can help.

Authorized Transactions

Authorized transactions help you pay yourself first. The concept is simple, and it works one of two ways for most consumers. The first way you can set up an authorized transaction to pay yourself is to speak to your bank. There is a form you can fill out to authorize the bank to remove a certain amount of money regularly to deposit into a savings account. If your bank won't do this or you'd rather do it through your employer, you can also speak with your employer's human resources department to ask about an authorized transaction of this nature. Your employer can automatically deduct the amount you want to save before you even see it in your paycheck and deposit it into a savings account rather than your checking account. It's a simple and effective way to pay yourself first automatically.

Continue reading to learn about how many savings account one person needs.

Multiple Savings Accounts

How many savings accounts do you really need? The answer is individual, but there’s no harm in having more than one if you have specific goals in mind. There is no reason you cannot have a retirement savings account, a rainy day account, a down payment for a new house account, and an emergency car repairs account. You have the freedom to save as much or as little as you’d like, but it’s helpful to separate your accounts when you’re working to make this program work. Savings is specific to some individuals and general to others, but applying a little to each account you need is a simple way to keep track of what you’re saving and how you’re planning for the future. You should have an emergency account with at least three months worth of expenses in it, for example, and anything above that is a bonus. Sit down with your family to discuss what’s most important to you regarding multiple savings accounts. No two families are the same, and you are free to make your own decisions regarding what you want to do with your income.

Continue reading to learn about how forming habits can help.

Starting A Habit

Change is difficult for many, but it’s easier to get into a habit such as saving than you think. If you’re going to save, you can start now and make it a habit fast. Start by creating your budget and delving deep into your finances to see where you are going with this. Next, transfer money from each check to your savings account, and make it the first thing you do each time you’re paid. It takes, on average, twenty-one days to create a habit. Giving yourself one month to create a new habit means you’re allowing yourself the opportunity to make this your lifestyle. If it’s a habit, you won't think twice about it. You won’t miss the money you’re putting into savings, and your mindset about money changes. Once you see your savings grow before your eyes in such as short period, it’s difficult to turn away from it. You become addicted to seeing that amount grow every month, and you might even find yourself looking for additional ways to save even more money.

Continue reading to discover the best places to keep your money.

Best Places to Keep Your Money

There is no right or wrong answer to this question, but some suggestions are slightly better than others when it comes to the best places to keep your money. For example, a traditional savings account with your financial institution might be the best place to keep money in an emergency fund, as it's easily accessible if you have an emergency such as car repairs or a house repair. If you don’t want to access your money easily, you might consider placing it into an account you cannot touch without jumping through hoops, a high-yield savings account, a certificate of deposit, or an investment account with a financial firm might be the best options. You also have 401(k) plans and IRAs for your savings. If you’re unsure how you want to save your money, check with your local bank and credit union to see which accounts are the most profitable for you.