Pay Yourself First in Managing Finances, What Is It?

14 April 2022

Pay Yourself First in Managing Finances, What Is It?

There are many ways to manage finances, one of which is to pay yourself first. What is it? Why is it important?

Pay Yourself First, What Is It?

Who doesn't want to be wealthy and have a secure future? One of the factors that determine your wealth and secure future is money. This is why paying yourself first plays an important role. It focuses on setting aside money to be saved, especially for the long term or the future. By paying yourself first, you are doing your future self a favor.

For example, you don't have to worry about retirement because you already have enough retirement savings. Where does this savings come from? From paying yourself first, from the results of saving money over the years.

Likewise when an emergency takes place. When you build an emergency fund consistently, you can use it to overcome the emergency right away.

Given the importance of the pay yourself first method, it would be nice if you can make saving money part of your fixed expenses. You need to budget for savings, just like you budget for other fixed expenses such as monthly bill payments.

By doing so, money has been set aside for savings before being used for other expenses, especially non-priority expenses such as entertainment, hanging out with friends and self-rewards.

How to Pay Yourself First

1. Separate saving needs

The easiest way is to first separate the saving needs so they don’t mix with other needs. Remember that paying yourself first emphasizes setting aside money at the beginning so it doesn't get used for priority needs.

For example, you want to save for emergencies and save for retirement. It would be better if these two savings are separated, even though they are both savings. You can do this by using the Jago application.

In the Jago application there is the Saving Pocket feature. For Saving Pockets, you can create up to 20 Pockets. If you have created 2 Pockets, 1 for emergency and 1 for retirement, this means you can still create up to 18 Saving Pockets. You can create other Pockets if you want to set aside money for other financial goals.

2. Start small at first

You don't need to start with large amounts right away, especially if you're not used to paying yourself first. As long as you always set aside money to be saved every month, you are starting to make progress.

Over time, you can increase the amount of money saved. And, as long as you consistently do it, paying yourself first has become part of your financial management.

3. Automate saving

In order for saving to actually grow every month, you can automate saving. Not only does money certainly go into savings, automating saving also lets you enjoy hassle-free transfers.

To save automatically, you can use the Autosave feature for every Saving Pocket that you have created. Let's start saving consistently to feel the benefits of paying yourself first. If you don't have the Jago application yet, you can download it here

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