Pay Yourself First
Earlier this month, we discussed dollar-cost averaging as a strategy for investing which can offer you a higher average rate of return over the long-term and a seamless means of investing each month without too much pain for your wallet. Today, we will discuss the best way that you can achieve this strategy through the concept called “Pay Yourself First”.
We all have the best intentions when we plan on investing for our future. You tell yourself that you are going to save and invest a certain amount beginning with your next paycheck but life happens and we always seem to put ourselves at the end of the line, paying bills and unexpected expenses first and any surplus is spent on dinners or shopping. Making yourself a priority is a must so you can take care of your future needs.
To accomplish this goal, we suggest when developing your budget to deduct your desired monthly savings first and use your net income to budget for your bills and expenses. Taking that idea a step further, in many instances you can schedule automatic savings from checking to savings accounts or checking to investment accounts. Doing so takes the task out of your ‘to do’ list and essentially makes these savings happens without effort on your part.
The more you can save, the better your financial house will be prepared for unexpected life events and for your future.