January 21, 2021
5 Reasons to Pay Yourself First
Someone might see the phrase “pay yourself first” and wonder what it means. In this context, it refers to the process of setting aside some of your earnings into a savings account or investments to prepare for a later point in your life. If you want to understand why you should pay yourself, then you should look at these five reasons.
1. Avoid Procrastination
People can easily focus on other aspects of their lives, such as buying a new TV or something that they don’t need. This can then cause them to procrastinate paying themselves, which will make their situations more difficult in the future. You will want to avoid procrastination when it comes to retirement and savings, so you should always pay yourself first.
2. Consistently Adding to Your Savings
If you pay yourself first whenever you receive a paycheck, then you will constantly add money to your savings account. This means that you will watch your account grow over time, and you will always feel like you’re progressing. Sure, saving instead of buying will feel like a sacrifice in the moment, but it will be worth your efforts as you continue to put money towards your future.
3. Using Interest Rates
Remember that savings accounts and investments will build up interest over time. This means that you will make more money as you continue to invest into these accounts. Sure, investments will naturally bring more money and interest, but you can still enjoy interest rates and extra money by putting money into your savings account.
4. Gauge Your Retirement
When you constantly pay yourself and put money into your accounts, you can properly determine when you will retire. To do this, you should figure out how much money you need, save it up, and then see how far you are from your goal. As you constantly pay yourself with each paycheck, you will be able to gauge when you can retire from your current job.
5. Constantly Remind Yourself
Each time you pay yourself when you receive money, you will remind yourself of your savings or investments. This means that you will have an easier time tracking your savings since you can put in the money, see the change, and watch your nest egg grow with time. With this constant reminder, you will feel encouraged to continue paying yourself first
Remember that you need to prepare for the future, especially if you want to retire, so you should always set aside money for yourself. This way, you will feel relief since you will have that money when you need it. As you review these points, you will see why you need to pay yourself first whenever you receive a paycheck.