pay yourself first

Ironically, one of the most important elements of personal finance is one many do not utilize. Whether you are selfemployed or work for others, paying yourself first is key to smart financial planning.

One e ective approach to the pay-yourself-first method is to treat your savings account just like you would a regular bill. Upon receiving your next paycheck, make a generous donation into your savings account. Do this every month, just as you would a water or electric bill.

The reason behind this method? Instead of merely wanting to save, you realize that you need to save in order to establish an emergency fund, save for your child’s education or live a comfortable retirement.

What if you live paycheck to paycheck? It is unlikely that one extra bill will cause you to run out of money. If this is the case, money experts have found a way around it. This may include cutting some unnecessary spending, like cable TV or your daily co ee run. After you pay yourself, chances are, you will find a way to pay your other bills.

HERE ARE FIVE WAYS TO CUT BACK THIS MONTH. WHAT SHOULD YOU DO WITH THE EXTRA CASH? PAY YOURSELF FIRST!

1. Clip coupons and compare prices at different retailers before you go shopping.

2. Pack your lunch instead of eating out. Not only will this save you money, but it’s likely healthier, too!

3. Cancel email subscriptions to sale alerts. You probably don’t need another pair of jeans—even if they are buy one get one half off.

4. Buy things used. One man’s trash is another man’s treasure, right?

5. Call your provider and switch to a cheaper home phone, cable or internet plan. If possible, consider cancelling these services completely.

SAVE, SAVE, SAVE

If you find that cash tends to burn a hole in your pocket, here are some more ways you can pay yourself first.

Pay into a retirement account. Most employers will give employees the option to set aside a specific amount from their paycheck each week to be deposited directly into a 401(k) retirement savings plan. Some employers may even match the amount you save. That’s a win-win.

Purchase whole life insurance. This type of insurance accumulates cash value as policy holders pay into it.

Pay o debts. Most credit cards accumulate interest over time. It’s in your best interest to pay o all credit cards as soon as possible.