In celebrating National Financial Literacy month, let’s discuss the concept of ‘pay yourself first’.
Pay Yourself First is a personal finance strategy to increase savings and save consistently while also promoting frugality. The goal is to make sure that enough income is first saved or invested before monthly expenses or discretionary purchases are made. Many times, folks struggle to implement this concept because they are thinking in larger terms, such as “I can’t save $50 a week or month because I can’t afford it…”.
Baby steps and frugality are key to adopting Pay Yourself First. Take a moment to consider the following options to start paying yourself first and begin building a savings.
- If you have both a checking and savings account, set up a $5/week auto transfer from checking to savings. Start small, then increase the amount of the transfer to $10 and so on after a month or two. Remember, it’s all about baby steps.
- If you do not have a savings account at a bank, stash $5/week at home. Older generations used this method by placing their savings in a coffee can, a special box, or under the mattress. You can transition to a bank account later as the money begins to build.
- Open a savings account at a less convenient bank. Automate transfers from your checking into this account. This method of saving is a cognitive trick to make you think twice when you think you may need to tap into your savings. You then have to consider the inconvenience of going to the bank to withdrawal the monies before doing so.
Additional Tips for Embracing ‘Pay Yourself First’:
- Prioritize paying off significant debts like credit cards in your budgeting plan. This means that they continue to get paid after ‘paying yourself first’, promoting healthy financial habits.
- Automate savings for emergency funds to steadily grow with minimal effort or thought. This approach can curb impulsive spending on big-ticket items.
At Daystar, we strive to engage, educate, and empower the community by promoting the value of nutrition, good health, and financial literacy. Our financial literacy programs offer personalized, one-on-one coaching that can help you with basic budgeting skills, credit card reduction skills, financial goal setting and saving for emergencies.
Please contact Paula Castoro, our Financial Stability and Capability Specialist, at paula.castoro@daystarlife.com to set up a free appointment to learn more.
Happy Financial Literacy Month!
