What does it mean to pay yourself first?
Savings is a prerequisite of investing. To save money, you have to “pay yourself first.” For high income people, saving isn’t a problem. But for the middle and poor class, saving can be a daunting task. How would you invest money when you can’t even save money? So here are 2 tips for you on how to follow the “pay yourself first” mantra.
Automate your savings or investments
If you have a savings account on any bank, you may ask if they offer auto saving plan. In BPI, you can avail of their BPI Direct Save-Up. If you have a savings account with them, you can enroll it to their program to have a portion of your savings account transferred to another account. This account doesn’t have an ATM card so that you’ll not be forced to withdraw your savings from here. This forces you to automatically set aside a fixed amount every month effectively pushing you to pay yourself first.
If you have a savings account with BDO, you may choose to enroll to their Easy Investment Plan. Instead of setting aside a portion of your income to another savings account like BPI, BDO auto debits your savings account to an investment plan that matches your risk profile. While saving is a good thing, investing is better in terms of rate of returns. You choose the amount you are willing to invest and it automatically deducts it on a day you choose.
Or if you are already a COL Financial account holder, you may choose to enroll to their EIP (Easy Investment Program). By regularly funding your account, the program automates your buying actions so that you’ll never worry if you spend lesser time monitoring your stock.
Do the old fashioned way
Coins when accumulated can get quite big given the amount of time. If you buy a sachet of coffee worth 7.00 pesos and you pay 10.00 pesos, set aside the 3.00 peso change and put it in a sealed piggy bank. Set a goal let say 1 year from now nefore you open it. Every time you accumulate change within the day, put it in the piggy bank. You’ll be surprised at how much it will grow without you noticing it. Then when it’s time to open it, deposit it in your savings account and do it again and make it a lifetime habit.
One final tip..
If you find yourself struggling to save a portion of your income, you need to reassess your spending habits and go back to the drawing board once again. You could start looking for other ways to increase your income by setting up a small business that will earn you passive income or cut back on splurge spending. If you identify the problem, make a meaningful goal out of it and set it in motion.
Happy saving!