How To Pay Yourself First

You are probably familiar with the advice to pay yourself first, but you might not understand exactly how to accomplish that goal. The key is to set aside funds for savings even before you pay any other bills. Depending on your circumstances, you may need several savings funds. What you definitely don’t need is to trap yourself in the endless cycle of payday loans. If you find yourself short of funds, LoanNow can help you re-establish your financial footing so that you can resume – or begin – to pay yourself first.

An Emergency Fund:

Many experts recommend setting aside at savings equal to at least six months’ worth of expenses.  But unless you receive a large windfall, you may find it impossible to save that much money at once.  The key is to pay yourself first by designating a certain amount of your paycheck to your emergency fund, just as you would for rent or your cell phone bill.  By treating your emergency fund as a priority, you’re more likely to maintain consistent contributions. You may be surprised by how quickly your emergency fund will grow into a resource that can give you peace of mind.

Retirement Savings:

You may love what you do so much that you never intend to retire. But many people look forward to the day that they can punch out of the work force for good. The key to being able to retire is to pay yourself first by contributing to a retirement savings plan. Take advantage of your employer’s 401 (k) or Individual Retirement Account savings plans, especially if your employer matches your contributions. If your employer doesn’t have a retirement savings plan or if you work independently, the IRS allows you to establish your own traditional or Roth IRA. If you’re under age 50, you contribute up to $5,500 total into all IRAs annually. If you’re 50 or older, the annual contribution limit is $6,500.

Educational Expenses:

If you have children, providing them with the means to acquire post-secondary education is one of the best ways to help them achieve financial well being. You may also wish to pursue additional education toward accomplishing a career change. There are several options for educational funds, including Coverdell accounts or tuition prepayment plans.  No matter which option you choose, the key to funding an educational account is to pay yourself first by designating a certain amount of each paycheck for depositing into your educational fund.

Special Occasions:

A smart strategy for covering expenses related to special occasions like weddings or vacations is to pay yourself first by establishing a special occasion fund.  But sometimes it’s impossible to plan far enough ahead to save all the money you need. For instance, an old friend may suddenly announce that she’s getting married in Hawaii the following month. A loan from LoanNow can get you on the plane in time to celebrate with your friend. But LoanNow also provides financial education and incentives to encourage on-time monthly payments to help you repay your loan. LoanNow can supplement your long-term savings plans with funds to meet short-term expenses!