What Does – “Pay Yourself First” – Mean?
By Jo Ann Brown – Author – “Getting Started On Your 401(k) Plan
A lot of people have the wrong interpretation of the simple phrase “Pay yourself first”. I’ve asked several people, and these are some of the things I’ve been told.
· After I pay my bills, and purchase the items I need, I then put something in the bank.
· I set aside a dollar a day. I deposit it at the end of the month.
· I have set up automatic monthly deductions from my bank account.
There is an inherent problem with using these methods to save. All too often, there’s never anything left over to save. The best plan is a sure plan.
When does Uncle Sam get paid? When does the State get paid? When does Medicare and Health Insurance get paid? These deductions are made before you receive your check. They don’t wait and neither should you.
Payroll deduction’s is the easiest way to “Pay Yourself First”. Use your company’s payroll deduction plan, if available, and arrange for a fixed amount to be taken out of your paycheck. Your employer will send these funds to an account of your choice before you receive your check.
The deposit choices for the automated payroll deductions are endless. Don’t limit your savings to only a low interest bearing savings account or money market account at your local bank. You can have the monies deposited in various accounts set up for an IRA or college education, assuming you have researched and identified mutual funds that can fulfill those needs.
This represents basic fundamental information you should know. Learn how to actively manage your accounts. All graduating seniors entering the work force need this book. Books can be purchased today at Amazon.com. Website: www.jab401k.com.
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