5 Steps to Make Ensure You'll Pay Yourself First

Every financial gurus will say that you must pay yourself first, no matter what. The guideline is always 10% of your take home salary. This 10% need to be used for investments.

But, many find it’s difficult to save that 10%.

Some could save it, but then they’ll withdraw those money for some expenses and emergencies.

So, I have a solution to ensure those money are not touched unnecessarily. This will work flawlessly for fixed income earners.

Check out the Jars System which I believe is the best money management system, if you want to go beyond just paying yourself.

Step 1: Decide that you want to pay yourself.

Without a decision, nothing will happen. You must decide and commit that you will pay yourself 10% every single month, and that money, you are going to use it for investment, not for expenses.

You must be ready to run your life with 90% instead of 100%.

Step 2: Open a new banking account

You are going to keep a separate account from your salary account. This will help you to manage your money more efficiently. You can tell exactly how much you have in that 10% account.

To ensure you won’t withdraw money unnecessarily, the new banking account need to be from a bank where its branches are located furthest from your home or office. It should not be within your usual driving path as well.

If you already have an account which you can use for this, make sure its far far away..

Here are some suggested banks you can consider as there are not many branches around:

Nova Scotia Bank, Kuwait Financial House, Al-Rajhi Bank, UOB, OCBC, HSBC, Citibank, Standard Chartered Bank, Affin Bank, Alliance Bank, Bank Muamalat.

Step 3: No ATM card.

Yes, no ATM card for your new account. This will ensure you’ll be in control of not withdrawing the money anytime of the day or at any ATM. 

If you already have it, cancel it.

Step 4: Automate

Set an auto transfer from your salary account into your new account. Schedule it every month a day after your salary day. Remember to update the amount whenever you have increment or a higher salary from a new job. For bonuses, transfer 10% of the bonus as soon the money is.

Step 5: Educate yourself to grow.

What’s the point of saving them if you don’t know how to invest?

Explore and learn how you can expand your money. No point the money just sitting in your account. Grow them by applying what you have learned.

Remember that the 10% is the minimum. You can do with 20% as well, just ensure your basic needs are meet and your are not stressing yourself.

If you follow the Jars System, you can have 6 separate accounts as well. The NEC account can be the salary account. The rest into separate accounts.