Financial Planning

Start paying bills to yourself

It is important to save for the future, whether we’re putting away money for retirement, a child’s education or a rainy day. The important thing is to stay focused. After all, we live in a consumerist world where it’s all too easy to get swept up by constant urges to have what others have.

Most people tend to first spend money on ‘wants’ and leave savings for last. This is because spending is instant, visible and tangible. Yet, the only way to make savings work for you, is to pay yourself first, otherwise you’ll never have any money left over for future goals and opportunities.

pay yourself first

What does ‘pay yourself first’ really mean?

Paying yourself first is one of the oldest rules of personal financial planning. As soon as your salary lands in your bank account and as soon as you start paying bills, you should set money aside for savings or paying debt. How you pay yourself depends on you: You can invest a little in a savings or investment vehicle each month or transfer a set percentage of your salary to an account from which you can allocate sums to save.

Self-care vs. self-sabotage

Your future is just as important as the bills you have to pay now. The ‘future you’ also deserves to be looked after. Think of saving money as a method of self-care. You are affording yourself opportunities in the future, whether it’s to start a business or to live comfortably when you can no longer earn a salary.

take control of your finances

Four steps to ‘paying yourself first’

Invest in the ‘future you’

The ‘future you’ deserves to be paid as much as the school fees, the phone bill and the alarm company. By paying yourself first, you’re mentally establishing saving as a priority. Setting aside money each month to grow your harvest of the future, so to speak, is empowering. It will help you maintain and improve your lifestyle over time.

Empower yourself with information

Knowledge is power and if you’re going to pay yourself first, find a method that works for you. Just as you would put a lot of research into the right exercise or health regime for your lifestyle, find a method of paying yourself first that is doable and sustainable.

Get financial advice

It can be hard to know on what you should focus your savings. Of course, you may also need to save for a house or a car, but it’s important to take a holistic view of your savings. Talk to a financial adviser about your savings and financial objectives to help you strike the right balance.

Make your savings goals extra visible

It is important to have a clear visual on your savings goals and having very clear savings goals will help. Research has proven that people who invest money with very specific goals save a lot more over the long term. It’s about retraining your mind to focus less on the now and more on the future.

Three ways to spend less

The world is making it easier to get around without cash, but we should make our money more visible. We should put limits in place to help ourselves think before we spend. Try the ‘envelope method’ for a week: only spend cash you’ve budgeted for that week. You’re bound to spend less.
Try to curb emotional spending, for example buying a new piece of tech because you feel bored or sad. Replace that with something else, like calling a friend.
Try to stick to one big shop a month and only one top-up shopping trip per week. The less time you spend at the shops, the better for your bank account.