What does it mean to “pay yourself first?”
OK, so you have to pay taxes first, but after that you should pay yourself. This means that before you access cash to spend on Amazon or on the date with your new upstairs neighbor, take steps to put money aside into savings and to pay for things you really need.
Here is what Captial Budget Strategies, LLC, Austin’s best financial coach, recommends:
STEP 1: Reduce your bank accounts to one checking and one savings account at a local brick and mortar bank. (Your savings account becomes your “Emergency Fund.”)
STEP 2: Open an online bank account, Ally Bank for instance, and set it up to make transfers to/from your checking and savings accounts.
STEP 3: Once you opened your first online account, you can then open as many sub-accounts as you would like. (Our Money Coach has 12 sub-accounts). Name each sub-account for an expense or a goal, such as Vacation, House Down Payment, New Car, Real Estate Taxes, etc.
STEP 4: Have all your family’s paycheck(s) deposited directly into your checking account.
STEP 5: Set up automatic transfers to your savings account (Emergency Fund) and all your Ally Bank accounts for the day after your check is deposited.
Therefore, if you get paid on the 1st and 15th of every month, you would set up the following automatic transfers for the 2nd and 16th of every month: $50 into your Emergency Fund, $50 into Vacation, $350 into House Down Payment, $100 into New Car, etc.
Congrats – you have just paid yourself first!
STEP 6: Any money remaining in your checking account can be used for “discretionary” spending, such as paying for your date’s dinner at Home Slice this Saturday night! (You go, big spender!)
Need more help with your personal finances? Contact Capital Budget Strategies, LLC.
For only $149, we will help you determine your Net Worth, analyze your spending, set up a monthly Household Budget, an Emergency Fund, a Snowball Debt Repayment Plan and let you know how well you are doing saving for retirement.
Give us approximately 4 hours and we will help you get financially organized!
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