Pay Yourself First

The trending catch phrase in the personal finance sector is Pay Yourself First. Every personal finance guru says it, but what exactly does this mean? In brevity, it means before you pay any bills or living expenses, set aside money for your investments and saving accounts. Quite literally, pay yourself first. There are several advantages to this method and it is a great way to develop self-discipline. 

Grow Your Savings Account

Savings, something everyone wants but few have. To begin with, opening or growing a savings account allows us to build our emergency savings and dabble in investments. When we focus on paying bills first,  there is usually not much money left at the end of the month to put into a savings.

This may be due to many different factors such as, unforeseen emergencies, poor spending habits or an unbalanced budget. The last thing we want is to spend all our money and realize that our car needs unexpected maintenance. This is where money in our savings account would have been nice. To grow your savings account faster, make sure to have a high yield savings account that doesn’t charge monthly fees. 

Stick to Your Budget

Secondly, paying yourself first means you need to make sure the remaining money is enough to cover your spending habits, rent, living expenses, and everything in between. This is where a budget is extremely helpful. A budget is the first organizational tool that one will need to get their finances in check. When we already have a budget set up, we know exactly how much money can be spent on luxuries like concert tickets, shopping, travel, etc. If you stick to your budget, you will always ensure that you are paying yourself first and paying all your bills on time. Key point: make a budget plan and stick to it.

Prevent Credit Card Debt

Lastly, without a budget or a pay yourself first mentality, it is hard to keep track of expenses. Have you ever looked at your bank account and saw enough money to take yourself on a #TreatYourSelf shopping spree with your credit card only to realize a week later that money was meant for other bills? I’ve done this more than I’d like to admit. But once I started paying myself first and sticking to my budget, I stopped spending money that I didn’t have. This helped keep my credit score high and my stress levels low. Let’s face it -ain’t nobody got time to worry about credit card debt.

Pero Tengo Un Chingo De Deuda

Sometimes, we feel trapped in our debt. Have you heard the expression living paycheck to paycheck? There was a point in my life I wasn’t even there – I was living day to day off tips as a server. No matter how dire the situation feels, there are steps we can take to regain our financial control. No te desesperes, don’t get desperate. Like my mom says, mas puede hacer el que quiere que el tiene. Or in similar but less flavorful idiom, where there is a will there is way. It’s okay to readjust the approach as long as there exists a game plan to move towards paying yourself first.

Do’s VS Don’ts

Here are examples of the DO’s which is “Pay Yourself First”, and the DON’T which is “Pay Yourself Last”.

I hope this helped demonstrate why the Pay Yourself First method is a crucial habit for a strong financial foundation. Good luck on your journey to financial freedom Amiga! And remember, PAY YOURSELF FIRST, not last!

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