Daily Juice 052 – Money Moves in your 20s
Tip 05: Pay yourself first
Tip #5 Pay yourself first
This simple, yet very powerful concept of “Paying yourself first” is something you need to drill into your head! There is no other way to succeed. Once you make more money, there will be lots of temptations. Look around and explore how successful people treat their money.
Paying yourself first means, once you get a paycheck, the first person on your list to get paid should be YOU. That’s right. YOU. Not your cell phone company or landlord or other bills, it’s YOU. That means you have to start Saving.
We talked about starting a Curveball account for emergencies, that’s an example of paying yourself first.
At some point, your Curveball account will be fully funded and you’ll begin focusing on saving for other goals (such as buying a car or taking a vacation).
Also, some employers will be offering you participation in retirement plans with a match (free money they put in your retirement account on your behalf). Take the offer.
If you don’t have a retirement plan at work, consider Roth IRA. The money in that account grows tax-free (you deposit after-tax dollars and gain no deductions today). You can always take out your principal, without tax consequences if an emergency comes.
And lastly, understand this basic concept of “Want vs. Need”. Before you go shopping next time, ask yourself whether the purchase is something you Need or just Really want. If you happen to have more “Wants’ than “Needs” go back to your Money Flow worksheet and review your monthly expenses.