How often do you find yourself settling your bills, buying your food for the month and then having little to nothing left over. How do grow your personal finances and improve your situation when you don't pay yourself? The idea of paying yourself first is important. This can help you avoid unwanted financial stress and uncertainty. Let's look at why you should pay yourself like you pay your bills to help yourself now and in the future.
Pay Into Sinking Funds
One of the ways to help your future self, is to pay into sinking funds every week or month. Sinking funds are little pots of cash that you know you are going to need in the coming months. Perhaps over the next year. Those annual payments that we have to make for specific things. It is a well known fact that if you pay annually for the likes of your car and home insurance, you will pay less than if you pay for it monthly. If you treat these payments like your bills, you can ensure that the money is there when you need it. You could even set up sinking funds for birthdays or Christmas because these are annual events where you likely spend money. Imagine having the funds already there for Christmas without having to scrabble around for cash at the start of December.
Plan For The Financial Unknown
Imagine planning ahead for financial expenses. Helping your future self with a simple pay yourself attitude. Bills arrive on cue every month, so we should also see our long-term needs and expenses as something to pay. This could include an emergency fund. A pot of cash which you pay into for those just in case moments. What would you do if you lost your job? How would you pay for those bills, put food on the table and such? It is a great idea to have at least six months worth of money you might need, set aside. This can include mortgage payments or rent. When you pay yourself your will thank yourself for it.
Work Towards That Future
What does your future look like? When do you want to retire? Where will your retirement cash come from? When you start those goals now you can put things in place to help you meet those objectives. You can start to pay yourself now so you have finances in place for that future you desire. Look at ISAs and investments which can grow over the years between now and your retirement. Starting this sooner in your life will give you more years for compound growth.
It Doesn't Have To Be Much
Your bills might be absolutely off the charts at the moment and you might be reading this thinking you can't pay yourself at all. Your bills might be £100+ a month but you don't have to save anywhere near that much. It doesn't have to be much at all. You could set up automatic payments so you don't even have to think about it, it just happens! However for some that might not be ideal as you might not want to save the same amount every month. Little and often can make a huge impact. Your financial future will give you a big thankful if you just begin.
Set up those sinking funds or simply have a separate savings account that you can pay into every month. Know that when those bills fall through the door, you are also going to pay yourself to help your financial situation now and later in life.
