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| Pay Yourself first |
“It is never too early to encourage long-term savings.” — Ron Lewis
Treat paying yourself first like paying your newspaper vendor or any other financial commitments, make it obligatory. Here are a few ways that you can do it in a hassle-free way:
1. Budget for it: The first step is to decide the amount that you can save every month. The financial situation in each and every household is different, only you can decide the quantum.
2. Direct payroll deductions: The easiest thing to do is to arrange with your employer to deduct and remit the desired amount to your savings account. Don’t apply for an ATM card for this account. The fund is earmarked for specific purposes such as investment, emergency fund, and down-payment for a new car
3. Arrange for standing order with your bank: Another way is to arrange with your banker to transfer an amount of your choice from the account that your salary is credited to a savings account.
4. Investment-linked insurance policy: This method is even better. You take up an investment-linked policy and arrange with a credit card issuer to debit your credit card for the monthly premium. The money you have saved provides protection for you as well as investment for your future needs. Because you pay your premium by credit card, you earn points (rewards card) or pay less (rebates card) for the amount charged.
5. Personal deposit into a savings account: When you are self-employed, it is necessary for you to deposit an amount into your savings account; you have to be disciplined to pay yourself first.
6. Unit Trust monthly investment scheme: Another good idea is to take up a unit trust investment scheme to invest a fixed amount every month by instructing your bank to remit the said amount from your account on a regular basis. The beautiful part is that it smoothes out market volatility and you benefit from the effects of dollar-cost averaging.
Can you think of any other ways to pay yourself first? Share your ideas with our readers.
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