Do You “Pay Yourself First”? August 27, 2020
We often tell ourselves that we will save what is left over from our salary but few have the discipline to do so. One of the best ways to enforce disciplined savings is to set aside a sum of money before paying our bills. Have you been “paying yourself first” before you begin paying your monthly living expenses and making discretionary purchases?
“Pay Yourself First” is a personal finance strategy of increased and consistent savings and investment before doing anything else. The sooner you kick-start this, the better your finances could become. Not only can you take advantage of compound growth which aids in growing your money faster, it also helps to ensure that your financial goals can be achieved even before any need arises.
However, “pay yourself first” could be easier said than done especially for people who are not financially savvy. Ultimately, it is all about being disciplined and cultivating a habit.
The golden rule is to inject some discipline and commitment by allocating a certain sum of your salary aside before spending any discretionary amount.
This simple method will guide you in achieving your financial goals such as building an emergency fund, buying a house, education, retirement etc.
Making “Pay Yourself First” autopilot
Adopting this “Pay Yourself First” mindset can be challenging as old habits and routines are hard to break.
Regardless, new habits can be cultivated easily; instead or trying to remember “paying yourself first”, make this process automatic. By setting aside your savings on an automatic mode, this habit will naturally kick in and it will be part of your routine.
With a routine in place, it will build long-term disciplined savings which will be beneficial for you in the long run.
Some Tips on “Paying Yourself First”:
- Allocate a certain percentage from your paycheck and assign this amount in a range of savings vehicles, depending on your financial objectives
- Begin by setting aside 10% – 20% from your monthly income
- Commit to the amount you have set before weighing out the money into other expenses
- Repeat this cycle on a monthly basis till it becomes a routine
- Consider increasing your committed amount once you have cultivated this habit
Still feeling lost? Fret not at PhillipCapital, we can help to cultivate “Pay Yourself First” habit. We offer the Regular Savings Plan for stocks and unit trusts; you may select the one that best suit your needs. Reap the benefits from the Dollar Cost Average Strategy as you invest with us regularly from as low as $100 a month.
Stocks
- Share Builders Plan: Access to more than 40 Singapore stocks for a minimum of $100 a counter per month
- Recurring Plan: Access to all U.S., Hong Kong and Singapore market on a daily, weekly, monthly or quarterly basis.
Unit Trust
- Unit Trust Regular Savings Plan: Access to more than 500 unit trust funds with 0% fees.
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About the author
Share Builders Plan (SBP) Team
SBP is a regular investment plan that allows an individual to start building up a portfolio of selected SGX-listed stocks from a minimum of S$100 a month. It takes advantage of the Dollar Cost Averaging concept that does not require you to worry about market timing and volatility when you are planning for retirement, saving for your children or achieving any other financial goals.
