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Definition of Pay Yourself First – putting some money away at the start of a month regardless of anything else

This sometimes seems the wrong way around in money management but it is a wealth secret. People often say that they will save any money that is left at the end of the month. However what usually happens is that there is no money at the end of the month and so nothing is saved.

There are several reasons to pay yourself first:
•    It gets you into the habit of good money management when you are saving when you have money in the bank rather than at the end of the month when there may be nothing left.
•    It means that no matter how much debt you are in you have something to show for it every month which can make you feel better
•    If you know that you cannot afford to pay your debts it stimulates you into finding ways of attracting wealth to pay off the debts. Even when you pay yourself first you still have to pay any bills or outstanding debts that you have identified in your money management plan.

When should you pay yourself last? If you have a credit card bill with a high interest rate and you can’t move it to a credit card with a lower interest rate then this is a case where you may consider paying yourself last or paying yourself a smaller amount. The reason is that the interest rate on your credit card is much higher than your savings account so the interest payments are increasing every month. If you do have a high amount on a credit card and you have a mortgage, see if you are able to increase your mortgage by taking out the extra money to pay off the credit card. Your mortgage will usually have a much lower interest rate than a credit card and so you are not paying all that extra interest.

People can struggle with this concept initially but when you pay myself first every month, it feels good seeing that amount increase every month. The percentage that you pay yourself every month varies depending on your income. If your income is low then you may only want to put a little aside every month initially until your income increases.

Wealth Quote: “You never suffer from a money problem, you always suffer from an idea problem.” Robert H. Schuller