7 Benefits Of Paying Yourself First

You want to save more money right? You are frustrated because you don’t know where all the money you earn goes or what you do with it.

You want to able to, at least, save a little from your earnings and not have your bills and needs take it all before the month is half.

If that is you, then, to pay yourself first is the answer. It is the best and easiest way to save more.
What Does it Mean to Pay Yourself First

It’s simple, when you get paid, you remove a certain percentage of that money into a savings account or an investment account or wherever you save your money, before you begin to pay your bills and spend on your needs.

You put that money away first, then you survive with the rest.

The reason why people don’t save more is that they do it the other way round. They pay their bills, try to clear their debts and spend on their needs before they decide if the remaining is enough to save.

The problem with this approach is this – there is no way you can satisfy all your needs. Even if you are given ten times your earnings a month, you will find needs to easily exhaust the money in no time.

You pay yourself first and worry about your needs later.
You pay yourself first and worry about your needs later.

What Benefits are There When you Pay Yourself First

You will learn to live on less

Let’s say your income is N50,000 and you decides to save 20% of your income. That will be N10,000.

If you are able to discipline yourself, you will survive on N40,000 every month.

The good thing about living on less is that you have more control, not only on your finances but on also your life.

You will be able to differentiate between what you really need and what you want. That is the basis of controlling your expenses and living on less.

You will save more and have a big savings balance

That is the goal of all these right? To save more and have a large nest egg.

With our example above, if you are consistent with your savings, in a year, you will have N120,000 in savings. That is big for somebody earning that salary.

You will invest more

Once you have a large saving, it is natural that you begin to look for where to invest all the money. And because it is big, you will have a lot of alternatives.

Some people do not invest because they have very little to invest and that put them off whenever an opportunity to invest comes.

Though it is possible to invest when you have little income, a large savings pool gives you the opportunity to diversify your investment and have even more returns.

You will be able to make large purchases

There comes a time in your life when spending a large sum of money on a particular item is inevitable.

We need a house to live in, we need to furnish the house. A time comes when we need a car.

A time comes when you have to get married unless you want it to be the topic of discussion anytime your mum calls you.

Paying yourself first makes it easy and possible to pay for these things.

You will have peace of mind

It’s true that money doesn’t determine how happy you are, but it helps. If you suddenly fall sick without money, you will worry because you can’t get proper treatment.

When you have a large savings balance, you worry less about money and focus on other things that matter in your life. It gives you peace because whatever happens, you have the financial power to deal with it.

You will become financially free

This is the ultimate goal right – to achieve financial freedom.

The good thing about financial freedom is that you are not only free financially but you are also free to live your life the way you want.

You can travel anytime you want, work whenever you feel like, spend as much time you want with friends and family.

When you pay yourself first, you build a large savings poll which in turn you invest. Those investments grow which enables you to achieve financial freedom.

You will retire well

In the end, you will retire well.

When you live your life keeping the basic principle of money, it is inevitable that towards the end of your life you will be able to have enough to live a good life in your retirement.
In conclusion

To pay yourself first is very important if you will achieve financial freedom.

The good part is that it’s an easy thing to do.

What you have to do is, before you worry about your neighbour whom you owe some money, or before you pay those bills, or before you start shopping away, make sure that you have paid yourself first.

That way, in the nearest future, you will reap the full benefit of paying yourself first which is to achieve financial freedom.