Pay Yourself First. This has often been referred to as the Golden Rule of Personal Finance. So what exactly does it mean and how can you do it?
Pay Yourself First: What does it mean?
Paying yourself first means to invest or save before making any expenditures. This is equivalent of saying that you save first and then spend, rather than spending first and saving later. So when you pay yourself first, you make saving a priority.
|Save & Invest before Spending
As soon as you receive your paycheck, you should pay yourself first, i.e. Save & Invest, and then move on to spend anything. But this is easier said than done. For many people, it just seems too hard to save their money first because they feel that they have too many loans, bills and other commitments. So how do we do it?
Pay Yourself First: How to do it?
Once you have decided that from now on, you are going to pay yourself first, it is time to take some action. And the best way to do it is to AUTOMATE IT.
- In case you are planning to save for your retirement, ask your employer to automate your PPF, EPF, VPF deductions. In this way, you would have saved for your retirement, before even getting any money in your wallet!! 🙂
- If you are interested in stock markets, you should make regular monthly investments (SIP) in good mutual fund schemes. This can be automated via an ECS mandate to your bank.
So, now that you have understood the concept and importance of Paying Yourself First, what is the best thing you can do right now??
|You Action Plan to pay yourself first.