Financial planning can come off as complex and intimidating. Many people give up before they even begin because it feels like too much work. But the truth is, healthy financial actions can be very simple. You just need to know where to start.
One of the best ways to start is by paying yourself first. What does that mean? It’s simple. It means that before you pay any bills or buy any essentials or spend any money for fun, you take a portion of your earnings and you put it into a separate account under your name.
Once that’s done, you can use the remaining money for all your life’s needs knowing that you’ve made progress towards bigger goals. Does that sound too simple to be effective? You’ll be surprised by the results.
Paying Yourself is Simple, Easy, and Powerful
For those who have a lot of bills and debt, it can feel like you’re working simply to keep money lenders and debt collectors at bay. By first paying yourself, you prioritize your needs, changing your perspective on the money you’re making.
It also changes the way you view savings. It’s easy to view savings as either another financial obligation or money you don’t get to use. But the truth is, when you pay yourself, that money is going into an account with your name on it that you have access to.
Unlike the money that you spend on bills or food or fun, this is actually your money. So, prioritize it and protect it. Soon, your spending habits will naturally adjust, and you won’t even miss the money you’ve set aside. You’ll make fewer impulse buys for things you don’t need.
Meanwhile, the money you’ve set aside will continue to add up.
What if I Have Debt?
If you have debt, that should typically be your highest priority. However, you should first make sure you have an emergency fund in place. You can quickly build this up by paying yourself first.
Once that’s been done, you can reduce the amount you’re paying yourself and refocus that money on your debt. You can also use the concepts of paying yourself first to build up another account that you then put towards your debt as an above-and-beyond payment.
Don’t Do It Alone
You don’t have to rely on your own willpower to pay yourself first. Many employers will allow you to split a certain amount off your paycheck, placing it in a separate account of your choosing. Alternatively, there are a number of apps available that perform a similar function as revenue comes into your bank account.
If you really want to get serious about your finances, however, it’s best to bring some external accountability into your life.
Whether you’re already paying yourself first, or you’re struggling to make the process work for you, a certified financial advisor can help you achieve your financial goals. Not only does a financial advisor provide accountability, but they bring keen insight and experience that can help you realize your true financial potential.
At KB&P Financial Partners, with work with people of all different backgrounds and economic standings. We want to empower you to live the life you’ve always wanted to live. For financial planning in Springfield, Ohio, contact us today!