Saving more money is something everyone wants to do, but few of us actually get around to doing it. Something or other always manages to get in the way.
You go out for dinner, get a haircut, and splurge on some new moisturizer for the winter. Before you know it, you’re broke until next payday, and you didn’t manage to save a single dime.
If you’re always coming up short, it’s time you follow this one rule: pay yourself first. This technique prioritizes your savings, so you don’t accidentally spend all your money.
Pay Yourself First: What Does it Mean?
The pay yourself first (PYF) rule dictates you set aside money into savings before you do anything else with your cash.
This might feel strange at first. After all, the typical budgeter pays off bills and other essentials first before moving onto splurges, saving whatever is leftover.
But when the leftovers wind up being crumbs, the typical way of budgeting doesn’t work.
The PYF method aims to fix this problem by flipping your priorities around. This way, you send some cash into your savings account as soon as you get paid. Then you pay off bills with what’s left.
Once you skim savings off your paycheck, you have less money to use on your usual monthly splurges. You might have to sacrifice unnecessary items so that you can balance savings and essential bills.
Why Are Savings So Important?
When you have to replace your brake light or take your dog to the emergency vet clinic, savings can be a huge help. With enough savings as backup, these stressful situations won’t feel like emergencies — just annoyances.
Once you save up enough in an emergency fund, you can even start working towards other financial goals, like a down payment on a house, a vacation fund, or money for a night course.
What if An Emergency Comes Too Soon?
If you’re dealing with an emergency without the backup of savings right now, you can look into a line of credit online. These online loans through MoneyKey may offer an alternative way to cover emergencies when your savings are low.
If you’re approved for an emergency line of credit, it can become a permanent part of your financial toolkit. That’s because it’s a revolving financial product. Once you pay off your withdrawals, you can redraw against your limit in the next emergency.
You don’t even have to use it to keep it open; a line of credit can sit on standby until you face an emergency without savings.
How to Adopt the PYF Method
Check in with your budget to see how much money you should be saving each month. Automate this contribution to your savings account at the start of each month, so you aren’t tempted to skip a month for something fun.
If you get paid by direct deposit, you can split your paycheck across multiple accounts. This setup sends savings directly to your emergency fund, so this money never arrives in your checking account, where you might be tempted to spend it.
Will You Try it?
The PYF method has been proven to help those struggling to prioritize savings over splurging. Give it a try to give your savings a boost this year.