Thursday, June 18, 2009

Tired of Being Broke? Start Paying Yourself First!

Paying yourself first means you save at least 10 percent of your income before your bills or anybody else gets paid.

I started saving ten percent by having my human resources director directly deposit 10% of my paycheck into my online savings accounts. I put it there because I do not have immediate access to the money. This lessens my chances of dipping into my savings.

Yeah, I know you work hard for your money. But, ask yourself, “What are my priorities?”

Is eating out, having extra cell phone features or dressing fly worth more than my future? If not, use these tips and avoid a one-way ticket to the poor house.

Paying yourself first is only one step toward building wealth. It also gives you emergence money and funds to invest with. Let’s say you earn one grand every two weeks. You save $100 the first pay period and invest the other $100 the next cycle. After 5 years, you would earn $ 6,275.46 in your savings account (assuming you earn 1.5 percent annually). And, $7,603.11 in investments, (assuming you earn 8 percent annually).That’s a total of $13,878.57. Was your sacrifice worth it?

Where are you going to get $200 each month to invest?

Brown bagging your lunch will save $100. That’s assuming you spend $5 per day, five times a week. You can find extra money by downgrading your cell phone features or having two zero dollar weekends per month. I’m sure you can think of other ways to cut needless expenses.

I’ll admit paying yourself first isn’t for the faint of heart. But, it sure beats being broke.

Picture provided courtesy of http://419.bittenus.com/

1 comment:

Sheena said...

You know, some of these I never thought about. Thanks for breaking down the $100 per pay period strategy. I think I will try that!