When you begin working at a young age, your savings period begins for post-retirement. Life is uncertain, and there are uninvited situations post-retirement when you need these savings. Savings are not just for emergencies, but also for random and daily expenses. In general, there is a similar situation during your working years where you’ve paid for everything else- groceries and utilities- but do not have enough to add to savings until your account is credited with the next paycheck. If this is your monthly cycle, then it is likely certain that you are not paying yourself first.
Paying yourself isn’t about spending on self, but saving before you spend on anything. The process of paying yourself ends up as a lifetime saving ritual and can be used post-retirement. So, try and set aside a portion of your income the day you get paid before you spend any discretionary money. Most people wait and only save what’s left over which is paying yourself last.
The process of paying yourself is not a short-term tactic, but a long-term one, and certainly encourages a promising savings method. You may have investments like Mutual Funds, Insurance and Bonds, but saving from your monthly paycheck also carries its own prominence.
Let us go deeper by finding reasons to pay yourself for retirement:
1. Helps in Setting up Priorities
One of the important priorities of life is to fund your future. This you can begin right from the early age of earning. Wealth building doesn’t happen by chance, but by the act of saving which you cannot deny. There can be many reasons why funding yourself right from the start becomes important. This includes your kid’s wedding, funding for their higher education, and other important expenses that can arise without any prior warning.
2. To Be Prepared for Ups and Downs
In life, there can be ups and downs, so keeping some amount of income on a separate savings account can be helpful after retirement. Although this can be difficult because we have a tendency of spending on extra things without thinking further but being determined will help.
3. What’s Last is What’s Left
New wants and desires always creep in and rapidly consume the extra money. So, paying yourself first and then investing in your needs efficiently will certainly make your desire more manageable.
4. Helps Create Momentum
Once you have committed to paying yourself every month from the total income you accumulate, it will help in creating momentum to manage personal finances. There is no denying that, as our income grows, spending also increases. This is because our needs increase which also brings additionals expenses. However, if you have committed to paying yourself every month, then you can short-circuit the expenses. This way you can concentrate on your financial stability.
5. Modeling Smart Financial Strategy
Don’t you think it would be an extra burden on your children facing your expenses post-retirement? So why burden them when you can model your financial strategy right from the earning age? Avoiding credit card debt, living under limited means, investing in money back policies, etc., are some of the ways you can model your smart financial strategy. Money back policies are life insurance policies that combine the benefits of saving tool and life insurance product to help secure yourself and your family. Moreover, money back policies help create wealth over time to meet your financial goals.
6. The Feeling of Private Victory
Imagine if your investments cross more than your expectations and make you realize that your post-retirement life is secured. Isn’t this great to learn? This is certainly a feeling of victory and will urge to save more from your total income.
No matter how much your income is. No matter how you earn. Paying yourself is the best cycle to build your wealth. The ultimate aim is to make your post-retirement life financially secured and investing in money back policies is a sound way to do so.