It’s a common saying but not everyone really understands what it’s about. So, I got paid, now what?
What pay yourself first really means is that you can’t wait to see what you have left at the end of the month to put into savings or investing. Unless you’re really doing well (and frankly even those that do really well) you’ll tend to spend what you earn.
Think back when you got a raise, did that exact amount of money end up in your account at the end of the month? No, you spent it. Eating out, buying that cool hat your mom said looked so good on you, or maybe an upgrade which ate up that raise no matter how sizable. And just think, you probably won’t have to sell that questionable hat on a garage sale site next year. No, sorry, that jaunty hat actually doesn’t look good on you. Your mom lied.
So, when you pay yourself first, that means set up an AFT (Automatic Funds Transfer) of a specific amount that you’re comfortable with (or not super comfortable with) that comes out of your account and directly into a savings account or an investment, like a daily TFSA (Tax Free Savings Account). The money is gone and out of sight, and you’ll be surprised how fast that adds up.
Digital automation keeps that simple and you don’t have to think about it, and it won’t just forget to do it one month over another. After you’ve built up a decent amount, lock those funds into a Term Deposit (many have a $1,000 minimum) or if it’s to increase your retirement savings, it can go directly into an RSP (Retirement Savings Plan), which your helpful Member Service Officers can help you with at Encompass Credit Union, or the wealth management experts at PlanWright Financial.
So, after you get paid, pay yourself. Your future self will thank you. With or without the hat.