Pay Yourself First….
I’ve always been good with money, I had a daughter and just allowed myself to think, well if something happens to me she will get it all from my dad’s military benefits the same as I did. But then here comes the second child …even though I shouldn’t have waited to my second child to invest, it’s just all of a sudden a light bulb went off…I hadn’t invested in my future nor theirs.
I was dating a fellow educator, and while on a hike one day, the conversation turned to money. He was going on and on about his personal stock holdings, his pension, how he was maxing out his 403(b) and how he owned an investment property in addition to his primary home. Then he turned to me and asked, “What are you doing about your retirement?” My answer: “Nothing.”
So I’ve talked to a few investors and I have done my research, I must say this past year, my money issues have somewhat increased and what I thought I was missing in not seeing my money grow, you would be surprised> It’s not as hard as you think…come take a peak and let me let you on a little secret…It’s Not To Late!
The phrase “pay yourself first” has become increasingly popular in personal finance and investing circles. Instead of paying all your bills and expenses first and then saving whatever is left over, do the opposite. Set aside money for investing, retirement, college, a down payment, or whatever requires a long-term effort, and then take care of everything else.
Create an account that is separate from all your other accounts. This account should be only for a specified goal, usually saving or investing. If possible, choose an account with a higher interest rate–usually these types of accounts limit how often you can withdraw money, which is a good thing because you’re not going to be pulling money out of it, anyway.Ad
Determine how much you want to put into the account and at what interval. For example, you can decide to put in $300 per month, or $150 per paycheck. This will depend on what you intend to do with the money. For example, if you want to put a $20,000 down payment on a home in 36 months (three years), you’ll need to save about $550 per month every month.
Put that money into the account as soon as it is available. If you have direct deposit, have a portion of each paycheck automatically deposited into the separate account. You can also set up an automatic monthly or weekly transfer from your main, active account to your separate account, if you can keep track of your balance enough to avoid overdraft fees. The point is to do this before you spend money on anything else, including bills and rent.
Leave the money alone. Don’t touch it. Don’t pull money out of it. You should have a separate emergency fund for just that–emergencies. Typically that fund should be enough to cover you for three to six months. Do not confuse an emergency fund with a saving or investing fund. If you find that you don’t have enough money to pay your bills, look for other ways to make money or cut expenses. Don’t charge them on your credit card (see Warnings below).