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When you set up a budget, whether personal or for the family, you need to make sure you pay yourself first. Here are three reasons why.
You have this grand idea to pay off all your bills and then save the money that you have left over. Then you get to the end of the month and realize that you have zero dollars to save. It’s time to set up your budget so that you pay yourself first.
Of course, you still need to pay your bills. This is why the budget is so important to make sure you can do it. Here’s why it needs to be done immediately.
You’ll end up spending the rest of your money on unnecessary items
When you don’t budget to pay yourself first, you’ll forget to put the money into your savings. You spend the extra money on frivolous items. Sure, they bring you joy at first, but that’s not joy in the long-term. I can tell you that seeing the money in your savings account grow is great. I hate taking money out of it.
If you leave your savings all the way to the end of the month, there’s nothing left to save. Then you’ll do the same thing each month, and you’ll get discouraged when you don’t see anything to save. The rest of your budget goes out of the window.
Set yourself up well by paying yourself first.
You have that cushion when you pay yourself first
When you start paying yourself first, you’re putting the money into savings. You have the choice of which savings you put the money in. I work with the largest amount going into retirement and long-term emergency savings, then a little less in the sinking fund, and then some that goes into a vacation fund. I always do this as soon as I’ve paid my rent and put my requirement amount into my tax savings account.
With the cushions there, I’m ready should something happen. Last month, I broke my phone. I was able to use some of my sinking funds to pay for that phone to be repaired. If I didn’t have the safety cushion, I’d have been worried about how to fix my phone.
This can happen with anything. The car could break down, the boiler could need replacing, or there could be an unexpected medical expense. Either way, when you pay yourself, you have that cushion to use.
You Gain a Better Understand of Your Spending
Do you spend the money because it’s there? I know a lot of people who do that. They don’t get into debt on their credit cards, but they do spend every single penny they have from their paycheck. Then they don’t have anything in savings.
When you start paying yourself first, you’ll be able to understand the way you spend. You’ll be able to see if you’re the type of person who spends the money because it’s available. By putting it in a separate account to save, it’s not as easily accessible.
This can help you curb some of your spending. You may find that budgeting it much easier because the money isn’t there for you to just spend.
Have you started to pay yourself first? What are you struggling with when it comes to budgeting? Let me know so I can help you.