Pay Yourself First - And Other Smart Money Strategies

 There are as many ways to budget and save as there are personalities. You may be a type-A, strict, and regimented sort of person or you may be a fly-by-the-seat-of-your-pants type. There is a budget plan for each and every type. The key is finding a style that fits with your natural tendencies.

 One style of budgeting is the pay yourself method. This method takes into consideration all the real-world things people want and need to spend money on. Think vacations, a new car, clothing, etc. The pay yourself first method commits to paying for these items - or saving the money for them in a savings account - before designating money to bills and other fixed necessities.

 The pay yourself first method calculates the financial commitments that are important to you and your family, sets that money aside, and uses the remainder income for the day-to-day budget. This is the opposite of traditional budgets that consider bill paying and fixed expenses the priority and setting aside savings for important, but not essential monthly items, an afterthought - if there is money left over.

The thing is… there usually isn’t.

 Paying yourself first can help you be honest about what matters to you - like an annual vacation or paying cash for your next car without feeling selfish or taking away from the fixed expenses of your budget.

 Another great trick for saving money is the envelope method. Imagine you want or need an item. Like a great new pair of shoes and a dishwasher. Both have merit, but one is more of a necessity than the other. If you have time to wait, you can use the envelope method to easily save and get those items fast.

The envelope method is simple. Grab an envelope and stash some cash in there. Each time you have some change or cash left over from a transaction, slip it into the envelope. Get a rebate check or unexpected small refund - slip that into the envelope. By putting small bits of cash intentionally into the envelope, you guard against spending extra cash that could easily add up for your purchase. Before you know it, you have the sum you need for the item you want most.

 The envelope system is actually great for vacations and holiday money. Simply putting $20.00 a week into an envelope will render $1040.00 after one year. That’s a tidy sum for a rainy day that doesn’t require much effort.

 Whether it’s paying yourself first or using a clever tool like the envelope method, there are as many ways to save and create wealth as there are ways to spend it. Saving more of your money each month is a way to create wealth, as is paying down your debt...accelerate your payments by adding more to the principal each month. This is a great way to pay off your mortgage...making an extra payment towards the principal can greatly save you money and help you pay off your debt. Research or create a method that works for you and your family.

The envelope system is actually great for vacations and holiday money, but you can also use it for saving toward retirement. As you fill your envelope with the change and rebate monies form everyday purchases, research an appropriate savings vehicle and invest this money. You would be surprised how quickly it can add up.

What strategies do you find work best? Share in the comments.

Until next time...

Cheers!

Lisa