Are you frustrated with the constant struggle of making ends meet and never feeling like you’re making progress financially? You’re not alone. A great way to break the cycle and build a more secure financial future is to pay yourself first.
This powerful financial technique prioritizes your savings and investments when creating your budget. But what exactly does it mean? Let’s dive in and discover the blueprint to start your journey to financial success!
Prioritizing your financial goals by paying yourself first means setting aside funds for savings and investment goals before paying bills and other expenses. It’s like “paying” your future self with online transfers from your checking account to your savings. By doing this, you increase your chances of meeting your financial goals, such as owning a home, upgrading your car, or taking your family on a dream vacation.
According to Lending Club, nearly 80% of Americans live paycheck-to-paycheck. Living paycheck-to-paycheck means that you rely solely on your income from your job to cover your living expenses and bills without any savings or surplus at the end of the month. This stressful and precarious situation leaves little room for financial planning or investing in the future.
Paying yourself first helps you avoid the paycheck-to-paycheck cycle that can prevent you from reaching your goals.
When prioritizing your finances, paying yourself first is a powerful way to achieve your long-term goals. For instance, imagine you and your partner have a combined household income of $55,000 yearly or about $4,500 monthly after taxes. Once you’ve paid your rent, utilities, and other bills that stay the same each month, you should set aside some money for additional expenses that fluctuate, such as gas and groceries.
Assuming you have $1,000 left over after these expenses, you can safely set aside $500 to build up your emergency fund. The other $500 can be used to cover any unexpected costs.
Tip: Make goal saving easy and automatic with the Payactiv Visa® Card*. You can securely store up to $10,000, and with SmartSave, you’ll know exactly how much to set aside without doing any math. Plus, it’s FDIC insured for extra peace of mind.
Understanding the concept of paying yourself first allows you to set specific financial goals for yourself and your family. Here are some popular financial goals to consider,
Read: Top Goals to Start Saving for Today
Paying yourself first is a powerful financial technique that can help you achieve your long-term financial goals and increase your financial flexibility between paychecks. By prioritizing your savings and investments before your bills and expenses, you can give yourself increased financial stability.
* The Payactiv Visa Prepaid Card is issued by Central Bank of Kansas City, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Certain fees, terms, and conditions are associated with the approval, maintenance, and use of the Card. You should consult your Cardholder Agreement and the Fee Schedule at payactiv.com/card411. If you have questions regarding the Card or such fees, terms, and conditions, you can contact us toll free at 1 (877) 747-5862, 24 hours a day, 7 days a week.
All content provided on Payactiv.com/financial-learning/ is for informational purposes only. Payactiv makes no representations as to the accuracy or completeness of any information on this site or found by following any link from this site. Payactiv will not be liable for any errors or omissions in this information nor for the availability of this information. Payactiv will not be liable for any losses, injuries, or damages from the display or use of this information.
When starting your personal finance journey, you’ll find that many experts...
Planning on reuniting with your extended family this holiday Or maybe...
While the holidays should be a time of excitement, joy, and magic, the toll...
© 2023 Payactiv, Inc. All Rights Reserved
* The Payactiv Visa Prepaid Card is issued by Central Bank of Kansas City, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Certain fees, terms, and conditions are associated with the approval, maintenance, and use of the Card. You should consult your Cardholder Agreement and the Fee Schedule at payactiv.com/card411. If you have questions regarding the Card or such fees, terms, and conditions, you can contact us toll-free at 877-747-5862, 24 hours a day, 7 days a week.
** Central Bank of Kansas City is the issuer of the Payactiv Visa Prepaid Card only and does not administer, endorse, nor is liable for the Payctiv App.
1 Standard rates for data and messaging may apply from your wireless provider.
Google Play and the Google Play logo are trademarks of Google LLC.
Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.