Step 7 of 12 to Financial Wellness: Pay Yourself First
Paying yourself first is a crucial financial strategy that emphasizes prioritizing your savings and retirement without neglecting your necessary bills and debts. This approach helps you develop the habit of ensuring your future self is financially secure. Here are some practical tips to help you cultivate this habit: Asses Your Spending Start by evaluating your current expenses. Calculate whether your paycheck can cover both your necessary bills and your savings goals. Don’t hesitate to make adjustments as needed; flexibility is key. Determine How Much to Save Once you’ve assessed your spending, it’s time to decide how much to set aside for yourself. A popular guideline is the 50/30/20 rule: allocate 50% of your income to essential expenses, 30% to savings, and 20% to discretionary spending. If you receive a raise, be sure to revisit and adjust your savings contributions accordingly. Identify Your Savings Goals Create a list of short- and long-term savings goals to clarify