Why do you work every day? Not to pay someone else, PAY YOURSELF FIRST!
The majority of people will pay their bills and expenses first and then pay themselves afterwords. Doing things this this way makes it difficult to get ahead. Too often there isn’t any money left to pay yourself with.
At Newton Financial we are suggesting that you do things opposite.
With just a little effort you will see your savings grow. Here are some suggestions:
1. Determine your monthly expenses – Take a look at your bank account and add together your bill payments, cash withdraws and money transfers.
2. Subtract your monthly income from your monthly expenses – Seems pretty simple right? If you are bringing in $2000 a month and have expenses of $1600 then you have $400 left over to pay yourself with.
*You may want to pay yourself $300 of that and keep the extra $100 for unexpected expenses.
The next steps are ways to find more money to pay yourself:
3. Reduce your fixed expenses – Just because they are fixed expenses that doesn’t mean you can’t replace them with lower fixed expenses. Take a look at each type of fixed expense and examine if there are any ways to reduce them.
For example: You may be able to find a lower cell phone plan that uses less data. You can use messaging apps when connected to wifi instead of paying texting rates or using data.
4. Reduce your variable expenses – You can find most of your new savings here! Take a close look at your expenses each month and see where you’re spending on things that are not fixed. Look at small expenses that add up over time like coffee purchases, eating out, grocery bills, gasoline, or leisure purchases. These will change each month so you will want to get an average.
*There are many smart phone apps out there that can help you see where your variable expenses are going and how much you are spending on them.
Perhaps now you have found $200 more to pay yourself each month.
5. Open a separate saving account – Keep this account distant from your usual spending accounts and do not touch it!
6. Place all of your newly found money in the Savings account immediately – Now that you know how much you can pay yourself, do it! Your employer may allow you to directly deposit a portion of your pay directly into this account so you won’t have to worry about the temptation to play with it instead.
If you have any questions at all, we at Newton Financial will be very happy to talk.