Pay Yourself First
Each month you settle down to pay bills. You pay your mortgage lender. You pay the electric company. You pay the trash collector. But do you pay yourself? One of the most basic tenets of sound investing involves the simple habit of “paying yourself first,” in other words, making the first payment of each month into your savings account.
Saving patterns vary widely and too often, short-term economic trends can interrupt long-term savings programs. For example, the U.S. Personal Savings Rate jumped from 3.5% to nearly 8% in May 2008 during the sub-prime housing and banking crisis. It then rose and fell sporadically as the economic environment appeared to stabilise.
THE GENIUS OF PAY YOURSELF FIRST
Anyone who’s ever managed their own finances knows that saving can be a challenge. There seems to be an endless stream of expenses that demand a piece of each month’s salary. Herein lies the genius of paying yourself first: you get the cream at the top of the bucket, and not the leftovers at the bottom.
The trick is based upon prioritisation. Make it a point to put your future first. At first, saving may mean a small lifestyle change, however most individuals want to see their net worth increase steadily. For them, finding ways to save becomes more of a long-term commitment than a short-term challenge.
PUTTING YOUR MONEY TO WORK
What will you do with the money you save?
If retirement is your priority, consider taking advantage of tax-advantaged investments. Employer-sponsored retirement plans can be a great way to save because the money comes out of your salary before you even see it. Also, as an added incentive, some employers offer to match a percentage of your contributions.
For money you may want to access before retirement, consider placing the funds in a separate account. When the balance hits your target, you may want to move the money into investments that offer the potential for higher returns. Of course, this may mean exposing your money to more volatility, so you’ll want to choose vehicles that fit your risk tolerance, time horizon, and long-term goals. Certainly the perfect time to engage with a professional Wealth Manager who can steer you along the correct lines and mitigate risk potential.
In the pursuit of growing wealth, sound habits can be your most valuable asset. Develop the habit of “paying yourself first” today. The sooner you begin, the more potential your savings may have to grow.
Contact NEBA Wealth Management today to take advantage of risk controlled investment and protection strategies and let us guide you along the path to financial freedom. Email: [email protected] or Call: +60 3 6206 2183
Licensed under the Labuan Financial Services & Securities Act 2010
License Number: BS2018120 Company No: LL11916
