How much do you deposit into a savings account each month?

$100? $200? Nothing? Talk to anyone and they’ll attest to the importance of having a personal savings or emergency fund. But it’s easier said than done – especially since most people barely earn enough to cover their basic living expenses. But does this mean we should stop trying to save? Absolutely not.

Learning to Pay Yourself First

I didn’t recognize the value of saving or paying myself first until about three years ago. Like everyone else, I would get my money and immediately pay bills. Afterwards, I would take my disposable income and have a good time ― buying clothes I didn’t need, eating out, planning vacations, etc. I had a saving account. But depositing money into the account wasn’t a top priority. I had better things to do with my money ― or so I thought.

Saving For The Future

I’ve always heard financial experts say, “pay yourself first,” and to be completely honest, I thought I was doing that. I didn’t work just to pay bills, and I made sure I spent my money on fun things. Hence, the shopping trips and vacation. But I quickly realized my mistake. “Paying yourself first” doesn’t justify whimsical spending. This idea supports creating a nest egg or financial cushion, which is something we all need.

Think About It

We’re quick to pay the mortgage, car payment, doctor bills, insurances, and utilities. Even if we don’t have the cash, we find a way to come up with the money, and we pay these bills religiously. Meanwhile, our bank accounts are empty and we sit around broke.

Why Is Everyone Else Deserving Of Your Money?

Yeah, they’re your creditors and you have an obligation to pay them. But what about the obligation you have to yourself? The concept behind paying yourself first is simple: save money before giving it away.

You As A Monthly Expense

Viewing your savings account as a monthly expense – one that takes precedence – is a quick and simple way to build a financial cushion, and you don’t need to pay yourself a lot. Start small and deposit 5% or 10% of your weekly or monthly income. Once you’ve gotten used to the idea, increase your deposits. Naturally, it’s easier to spend than save; therefore, you may have to fool yourself into saving money.

Automate Deductions

Talk to your employer about automated deductions and have money from your paycheck automatically transferred into a savings account. Also, several banks feature programs where a specified amount is automatically drafted from your checking account and deposited into a savings account.

Pay off your debts

I’m not talking the minimum payments. Completely pay off your credit cards and you’ll save money every month. Instead of using the savings on non-essentials, deposit the money in a bank account.

Make an Extra Mortgage Payment

True, you’re giving the money to your mortgage lender, but you’ll benefit in the end. This method builds equity, and if you make several extra payments throughout the life of the loan, you’ll pay off the balance sooner.

Supplement Your Income

Nowadays, it isn’t unusual for people to look for secondary employment. But if you’re going to acquire a side hustle or secondary source of income, don’t forget to use the proceeds to reward your bank account (and, in the long run, you).

Photo by TheTruthAbout.