Step 7 of 12 to Financial Wellness: Pay Yourself First

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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 your reasons for saving. Focus on building an emergency fund while also contributing to your retirement savings. Start small if necessary, and gradually increase your contributions as your financial situation improves.

Adjust as Needed

Life is dynamic, and so are your finances. If your expenses change, consider reducing contributions to a savings goal or cutting back on discretionary spending. Conversely, if your income increases, take the opportunity to boost your savings. 

Set Up Automatic Savings

Make saving effortless by setting up automatic transfers to your savings account. At New Horizons CU, we offer convenient automatic savings options through our Online & Mobile Banking. Explore these features today to simplify your savings journey! 

By adopting the practice of paying yourself first, you’re taking a proactive step toward achieving financial stability and peace of mind. Start implementing these strategies today and watch your savings grow!

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