Save First, and Then Spend
Pay yourself first. When I first heard this phrase, I actually thought, how do I pay myself? What with?
Then I realized that it is not really pay yourself first, but save first and then spend.
At some point in time in our lives, it is likely that we have been short of money. Whether it be at the grocery store, traveling, or being on vacation. Currently 50% of households in the US, cannot afford an unexpected bill of $500. After all bills have been paid, there simply is no money left to pay bills. But what if there was, with a little adjustment in money habits and spending behavior.
In that case, what did we do? We simply made smarter choices. We made do with some things and not others. Think how your decisions changed when you were short of money.
When you know you have less money to spend, you make smarter choices, because you have to think about the best way to spend that money. Each dollar has a value and you can only spend it once. I would recommend using that same mentality even when you are not short on cash.
Savings is Key
When you get paid, I suggest putting 10% away immediately. You will soon get used to having less disposable income each month, but guess what, you will be making smarter decisions, which is a win-win.
(If for example you get paid $1000 per month)
Month Month amount Cumulative
1 100 100
2 100 200
3 100 300
4 100 400
5 100 500
6 100 600
7 100 700
8 100 800
9 100 900
10 100 1000
11 100 1100
12 100 1200
By the end of the year, you have a month’s salary in the bank. You no longer are one of the 50% “have not” statistics that cannot afford an unexpected bill of $500 or more, and you are making smarter choices each month. As you get paid more, you are able to save more.
Your savings are now there for a deposit on a house, a car, an unexpected vacation, further tuition or whatever priority comes your way.
Like any habit, the good habits are always the hardest to start – no sugar in your coffee etc., but with a little perseverance, you will reap the rewards.
See how your money habits stack up and play our online game CashCrunch 101