Why You Need to Pay Yourself First

 Do not save what is left after spending; instead spend what is left after saving.” ~ Warren Buffett

Putting money in savings before you begin to plan for other expenses is called Paying Yourself First. No matter how you save or the amount of money you save, this is one of the most fundamental saving concepts.

Saving is about creating income to live the type of lifestyle that you want now and in the future. Saving money is affected by how much you save, how long you save, and the interest rate you are earning on your money.

There are a variety of ways to save money including a savings account at your local bank or credit union, contributing to a retirement account through your employer, or contributing to a personal retirement account.

When you save money you earn interest. It is important to know that each type of saving earns different interest rates. For example, a savings account at your bank or credit union might have a lower return than a certificate of deposit at the same institution. If you are looking to generate more interest, you will need to look into investing in longer-term investments such as retirement plans. Below are five ideas to think about when saving:

  • Start Small – Rather than trying to save an unattainable amount each month that will prevent you from meeting your financial obligations, begin with a more manageable amount based on your current income level. For some, this may be as little as $10, while others can justify $100, each pay period. 
  • Automate Your Savings – Some people automatically save 10% of what they earn, while others use 20% to reach their savings goals sooner. The key is to pick an amount that works for you and have it automatically deducted from each paycheck and deposited into a separate savings account.
  • Open An Account for Different Savings Goals – You might find it helpful to open separate accounts for vacation, holiday, or education savings. Talk to or research banks and credit union products that feature special rates for specialized savings. 
  • Get Advice from Others – If you have had trouble saving in the past, take advice from someone who is a good saver. This can include talking with peers or listening to podcasts or presentations by those who have proven ideas on how to save.
  • Make it Real – No process is truly complete until it shows tangible results. Set yourself a goal or target to save so much in a specific amount of time, and then track it daily, weekly or monthly to see how close you are getting to your goal

 

A Journey to Personal Financial Success

At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.

Learning how money works and how to talk about money with others are the first steps towards recognizing an individual’s lifelong financial goals. Our online programs, podcasts, blogs, and book reviews and resources are designed to help you learn the concepts, rules and vocabulary of money, finance and investing.

Becoming an MFF Fellow

Our Standards of Financial LiteracyLearning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.

Becoming an MFF Fellow is the ticket to access additional MFF programs and opportunities for mentoring, networking, internships and real-world opportunities. Hear from the MFF Fellow themselves on how these opportunities encourage them to continue their journey to personal financial success.

Learn More about Money

Begin the journey towards personal financial independence today. START LEARNING TODAY

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest