The best personal finance advice every woman should know is to pay yourself first. In a nutshell this means when your salary comes in, make it a priority to send some money to your savings or investment account.
If you can do this, you can become a saver rather than a spender, thus significantly improving your financial situation.
Why is Paying Yourself First The Best Personal Finance Advice?
Paying yourself first is the best personal finance advice you can ever receive because it can help you to stick to your good intentions as well as achieve your financial goals.
We often say that we will start saving money, but end up spending it instead.
It is all too easy to buy things we don’t really need when the money is just sitting there, languishing in our current accounts. By the end of the month, there is often nothing left to save.
Paying yourself first gets around this by making sure that you commit money to savings right at the beginning of the month. Once it is in there, it will be less easy to spend thoughtlessly, so it won’t be wasted.
You might not even miss spending it that much and you can still keep enough in your current account to enjoy the occasional treat. All you need to do is protect the money that you want to save first.The best personal finance advice for every woman is to pay yourself first. Click To Tweet
How To Pay Yourself First
Before you can begin paying yourself, you need to work out how much you can save each month. If you have a steady income, this should be fairly easy.
Work out your monthly budget, including all your bills and some spare spending money. Deduct this amount from your pay cheque, and decide how much of the remainder you want to save.
If you are self-employed, or if your earnings fluctuate, you might need to be more careful. In this case, you could choose to decide on a monthly basis or alternatively commit to saving a certain percentage of whatever you make.
Check out our handy guide on how to budget on an irregular income.
Next, set up a separate savings account. The simplest way to do this is to open a savings account linked to your current account. Your bank should be able to set this up for you.
Linked accounts can make transfers very easy and the interest rate doesn’t matter too much at this point.
You can always transfer your money into a higher interest account when you have built up some savings and developed this new money habit.
Now, when you get paid, make sure that the first thing you do is to transfer some money into your new savings account.
You can do this yourself, or set it up to happen automatically (providing you are likely to be paid on time each month). You don’t want to end up overdrawn if your transfer occurs before you have been paid.
Here Is The Deal:
Think of this transfer as paying your first bill of the month. It just happens to be a payment to yourself. You are rewarding yourself for all your hard work by investing in your future.
What is the best personal financial advice you have ever received? Do you have any advice for first-time savers? You can leave a comment below. We’d love to hear from you!
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