Pay Yourself First:
Future You Will Thank You
Let's be real, there are a lot of competing demands on our money. My biggest piece of savings advice is: before paying money for anything, pay yourself first. There are so many companies with slick marketing machines designed to get you to part with your heard-earned money. By pay yourself first, I mean to put something aside for "future you" as part of a savings plan.
Why is this important? If you wait to see how much you have left at the end of the month to move to savings, you won't have as much as you would had you taken it first. We tend to spend what we have available. By putting something away first, we reduce the amount of money in our bank account before we recognize that it's available to spend. It's even better if you're able to put it on autopilot by setting an automatic savings contribution.
Most of my clients contribute in this automatic way on a monthly basis or even on a biweekly schedule in line with their paycheques.
But, how much should you save? Well, that's going to depend on your goals. Ten percent of your income? Twenty? $50 a month? Even if the amount is small, getting in the habit of tucking something away is almost as important as the amount of the contribution, at least at first!
Are you self-employed? This is just as important for you, but you should also make sure to slice off an appropriate amount for income taxes. If you're not having income tax withheld from your payments, you definitely don't want to spend the money the government will be expecting come tax time.
Drop me a line if you want to talk about your savings goals and how to make paying yourself first work for you.