Pay Yourself First?

[mamamia]

After being a regular for a while now, I know I should understand how this works, but truth is I really don't. Can someone please take the time to explain it in simple terms, maybe adding how it works successfully for you? I gotta try something more than what we're doing, because it just isn't "cutting" it anymore! *SIGH*

Appreciate it!

Theresa

[SwirlyThing]

Pay yourself first means that every time you get money, you take some of that and put it into savings... before you do ANYTHING else with the money.

If you do this EVERY time you get money (paycheck or whatever your regular income is), then you learn to budget and get by on what's left over because you don't even consider the part in savings as spendable.

I'll use me as an example: I have 10% of my paycheck automatically diverted into accounts other than my checking (savings, 401K, etc). So when I get paid, I never even see that 10%.... it's as if it doesn't even exist as far as my monthly budget goes. So I automatically base my lifestyle on the 90% that does go into my checking account. I don't miss that 10% because I've never seen it in my checking account.

[ncarr]

I have mine done automatically too so that I don't have to worry about it.

[mombottoo]

The amount you pay yourself first will depend upon the money you have coming in and the money you have going out.

Back when we had to watch every penny (sometimes twice) we automatically had $25.00 per week taken out of dh's paycheck and put into a savings account. At that time we also had 2% go into his 401(k). Eventually we reached the max for the 401(k) of 16% (I believe that's what it was back then) per pay period.

I've had people tell me that they didn't have anything left to save...that's the idea of pay yourself first...if you pay you, first...you don't have to worry about having something left to save.

[ladykemma2]

10% to retirement

take home pay. write these checks first.
10% to church
10% to savings account
then pay bills with the rest