How to Pay Yourself First
We've all heard the basic financial planning strategy "pay yourself first" but paying yourself first doesnít simply mean stashing money into your savings account - debt reduction and retirement plan participation also qualify. Paying yourself today can result in a more comfortable and prosperous future for you and your family.
Here are some easy ways to "pay yourself first":
Pay off your credit card debt and student loans. Paying off your debt will probably give you one of the highest returns for your money compared to any investments, and it is guaranteed! If you are carrying a $1,000 debt at 17 percent, by paying it off, you will get a comparable 17 percent return.
Pay a little extra on your monthly mortgage. By paying just $20 to $50 extra per month on your mortgage payment, you can not only shave months or even years of payments off your loan, you can also save a substantial amount of money on interest. Contact your lender regarding the easiest way to do this.
Pay off your car loan. Just because you have a five-year loan, doesnít necessarily mean you have to take five years to pay it off. Check your agreement for any prepayment clauses, and if you have the extra cash, consider paying it off sooner.
Sign up for the company pension plan. If your company offers a private pension plan and you can afford it, contribute up to your companyís matching point to maximize your dollars. This can be a great way to save and can decrease your taxes at the same time. Be sure to read and understand all plan material, especially matters related to investment options and any penalties for early withdrawals.
Have money automatically deposited into your savings account. You wonít miss it and you will be surprised at how quickly it accumulates. Put aside as much as you can each pay period and donít touch it. Consider it a present to yourself.
If you would like more information, as always, we are here to help you set up a realistic financial plan. Feel free to contact us for more savings ideas.
The information presented in this document is of a general nature only and should not be relied upon to replace professional advice. Before acting on this information, talk with a professional advisor as laws and regulations are constantly changing. Readers accept full responsibility; no document found here is a substitute for a consultation.