Pay Yourself First

Scott McEachern |

Surely you’ve heard the advice “Pay Yourself First”?

We use the “Monday Morning Approach” to introduce Pay Yourself First to those we work with. Basically, if you were to divide your work week into 5 days (usually Monday to Friday) then divide each day into morning and afternoon, we recommend that you use all the money you earn working Monday morning to “Pay Yourself First.”

What do we mean by Pay Yourself First?

  • ·         Start funding your retirement account
  • ·         Start an emergency fund
  • ·         Save for vacation
  • ·         Pay for life insurance premiums (for the what-ifs in life)

Set up your savings accounts to be automatic and set up the transfers the same day you are paid so you’re not tempted to spend the money. Start small too. While you may notice $200 or $300 disappear from your account, if you start with $25 or $50 a month, you’ll slowly become accustomed to having a few less dollars. Update this amount accordingly every 6 months to a year, slowly increasing it. Before you know it, you’ll have a savings account with a nice balance in it and you won’t have missed the money.

Once these are funded, you need to budget for your fixed expenses, and then whatever is leftover is yours to do what you please. You’ve taken care of and prioritized the needs, so how you manage the rest to pay for your wants is almost trivial. Love a $3 Double Double? Just make sure you’ve done the above first, then have a drink!