Monday, March 9, 2009

Pay Yourself First - But, How?

In my previous post, I shared about the reasons why you must Pay Yourself First. I believe most of us have heard about this financial rule. With the current economy crisis, demanding lifestyle and our 'never ending Wish List', it is easier said than done. Thus, I listed below 4 practical ways to pay yourself first.

1) Upon receiving your salary, make it a habit to withdraw a portion of it and directly deposit it to another saving account. Preferable a saving account without ATM card or cheque book. So, that it won't be easy for your to withdraw the $$$ when you have the desire to spend it away. If you find it hard to start with 10% of 20% of your salary, try with smaller amount. As the time goes by, you will find yourself to be able to save more and more. But, you must make sure it's your first priority before you spend away your salary. This method work best if you are someone with high level of discipline.

2) Arrange an auto-debit with your bank to automatically transferred a certain amount of $$$ (on a selected date) into another saving account.You can choose to do it monthly, quarterly, half-yearly or annually. The best way would be on monthly basis. Because the main idea is to save a portion of your monthly income. Personally, I find that this is the best method as it is natural for human being to be forgetful to perform the same task as the time goes by. Better to leave this task to the bank system.

3) Try to ask your employer or human resource department if it is possible to directly pay a portion of your salary to another saving account. This method is almost the same with the first method. The difference is your employer will do it for you, instead of you do it yourself. Before you get to see the $$$ in your bank account, your employer already help you to transfer it to another account. Because you didn't get to see the $$$, you won't have the desire to spend it away.

4) I would consider investment as a way to pay myself first. If you've an extra of RM500 or RM1K, why not starting a unit trust fund? And arrange for a standing instruction (SI) with the unit trust company to invest a fixed amount of $$$ in your fund, on a monthly basis? You'll be surprise to see how much you've saved as the time goes by.

So, when are you planning to start to pay yourself? Now? Or next month? It's never too late.

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