Infographic: Pay Yourself First

Paying yourself first is the golden rule of personal finance. What does “paying yourself first” mean? It means making your savings a priority – before you spend your hard-earned money on anything else, you make sure that you allocate money to your savings.

When you pause to think about it, it makes a lot of sense. Do you care more about the financial wellness of your local coffee shop – or your own? Paying yourself first means putting your own needs, and your own future, before anything else. That can be a lot easier said than done, especially if money is tight, but it’s important to remember that you don’t have to do it all at once. Start small with just $100 each payday, or even a dollar a day, and watch your savings grow!

Here are 5 excellent reasons to pay yourself first:

Build a Healthy Habit

When you train yourself to put aside a small amount of money each month, you might find you have more money to put away, even more than you thought possible.

Be More Mindful of Your Spending

Most people’s needs will expand with their income. You get a new job with a higher salary and all of a sudden, you’re thinking about moving into a more expensive apartment because you can finally afford something nicer. When you do this, though, you’ve effectively spent your additional salary on your rent and left none for increasing your savings. Stay one step ahead of the treadmill by paying yourself first!

Build a Nest Egg

You might be starting small, but don’t lose hope and keep your eye on the prize! Even if you’re only able to start saving a little each month now, you’ll soon have a sizeable nest egg you can use for a dream vacation, to purchase a home, or to save for retirement. Set your goals and stay focused on them as you save up to keep your motivation high!

Create an Emergency Fund

Unexpected costs and emergencies happen to all of us at one time or another. However, many Americans don’t have enough to cover even a moderately expensive emergency – and many more have no emergency savings at all. Start building your own emergency fund so that when the time comes, you don’t have to deal with a crippled budget on top of an emergency.

Peace of Mind

Finances are one of the biggest worries most people have. The fear can be especially intense if you’re struggling to get by or you know that one misfortune could land you in big financial trouble. You’ll sleep better at night knowing you have money socked away for emergencies or to fund expensive purchases.