Paying Yourself First

Procrastination, as per my previous post, is the number 1 factor why we Malaysians or even the world fail to ever reach our financial goal. The excuses are always the same and here are some of the most frequent excuses I have heard.

• I'll save after I reward myself with my pay.
• After I get my new phone/car/clothes/computer/console
• I don't have enough money!
• I'll start saving after my promotion.
• Save so much for what?! Cannot take to the grave also! Enjoy life first larh!

Yes believe me, I've heard the last one with my very own ears before.

What do all these have in common? Procrastination. It's always after I get this, after this happens, after after after after. This is the reason why I am a firm believer in paying yourself first! If you hate budgeting like me, this is the best method of saving you can follow.

Now what is paying yourself first? It basically means setting aside a set amount of money each time your pay comes in. The main reason why most people fail to consistently save is because every time their pay comes in, they spend it in paying off credit card debts, all the bills, loans etc. By the end of the day, you are left with nothing! Saying that your pay is too low to start saving is pure BS. Start saving even 50 per month is better than nothing. Just like the advice given my experts in how to achieve your goal, you must always take small little steps and if you really feel your pay is too low, start with 50.

Here are a few simple common steps on how you can start this habit going:

1. Start a new savings account where you swear upon yourself to never touch it unless it is a real emergency. No, buying a dress just because its on sale and it is a one time deal only is not an emergency for all you drama queens out there.
2. Start small. Like for example 50 per month. The most common excuse I've heard when given this advice is that how much can 50 bucks help me. See THAT'S the problem, people have one thousand and one excuses on why they shouldn't save.
3. Once you have this habit going, slowly increase the amount to say 100 bucks or more.

For those of you that want to go one step further, what you can do is actually to keep track of your spending to see how much money you REALLY need per month. Yes, focus on the word really. Most of us don't need to have that extra Starbucks everyday, or that expensive meal. Once you have estimated how much you roughly need to survive each month, start putting in that amount in your new savings account straight away once you get your pay!

If you are like me and hate keeping track of your spending every single day, just do it for a few months to get a more accurate estimation of your spending, and once you managed to save that amount consistently over a few months, you can stop keeping track of your spending. Do note that I do revisit this method every once in a while when I notice that I'm spending more than I should.

So, to get your finance on track, always remember to Pay Yourself First and not end up like the woman in the picture below.

Taken from: http://allfinanceupdates.blogspot.com/2012/07/pay-yourself-first-savings-tips-and.html