Be Selfish, Pay Yourself First

by Stacy Tharp 13. January 2015

Savings Piggy Bank

Let me rephrase that - paying yourself first isn’t selfish, it’s smart. But we should back up. What does it mean to pay yourself first? You (hopefully) have a monthly budget that includes your bills and day-to-day expenses. Paying yourself first means that before you take anything else into account, you first set aside a pre-determined portion of your income into a savings account.

So let’s say you want to save 20% of your income, and your monthly take-home pay is $3,000*. You would first set aside that $600 (0.20 x $3,000), which would leave you with $2,400 ($3,000 - $600) to then allocate funds for bills and other monthly expenses. Sounds easy enough, right? It’s almost as if that $600 was never there – except it definitely is there, earning you interest in your savings account!

This concept could get a little bit tricky during those months when you have a few extra unexpected expenses. You should always be prepared for months like these because no one is immune to unforeseen expenses.

So think about it ahead of time – if you have to make an emergency home repair, how are you going to pay for it? How about an unexpected medical bill? If you have three out of town weddings in one month, are you going to pay for the hotels out of your regular monthly spending money, or from a savings account? Maybe you want to set up a savings account specifically for vacations and use funds from that account.

There is no right or wrong answer when it comes to how to pay for these things – what you do want to avoid is not planning ahead, then panicking and stop paying yourself first.

You may have noticed that I was not specific about what type of savings account(s) you should use to pay yourself first. It’s up to you. It might be a good idea to speak with a Financial Consultant to decide how much money you should set aside, and into what types of accounts. The main idea is to have a plan of where you put your money, where you are “allowed” to pull money from in emergencies, and to pay yourself first!

*These figures are hypothetical and are not intended to be used as financial advice.

Top 10 Posts of 2014

by Stacy Tharp 31. December 2014

'Twas the Night before Christmas: Baltimore Remix

by Stacy Tharp 19. December 2014

1st Mariner is getting into the holiday spirit. With the help of our employees, we give you our rendition of "The Night before Christmas." Bet you've never heard this version before!

 

Having trouble viewing this video on your mobile device? Click here to watch it on YouTube.

 

Want more holiday fun? Check out our holiday eCard



© 2008- 1st Mariner Bank