Top Two Ways to Pay Yourself First

Saving is an intriguing concept. It's so mysterious and elusive. If you can do it, you seem to be immediately cast among society's most responsible and well-to-do.

The rule of thumb is that we're all supposed to have enough in savings to cover three to six months of living expenses in case of an emergency like losing a job or a medical problem. We try to save for college, a new car, a house and more. In addition, we aim to save for that magic number that will allow us to retire without sacrificing our quality of life.

Yet, saving money is hard. In fact, according to the U.S. bureau of economic analysis, the personal saving rate in the United States had been falling since the early 1980s until it finally started bouncing back about two years ago in reaction to the recession.


What's the trick to saving more money?

Some people say, "time is money," and there are definitely similarities between the two.

We always want to spend more time with family, exercising, reading for pleasure and more, but we never seem to have enough time. The truth is we don't make time. If these activities are truly important to us, we should schedule them first and fit the rest of our schedules around them.

Likewise, if you treat saving as the thing you do with the money you have left over each month, don't be surprised when you don't have anything left over to save. If we have it, we spend it - call it human nature.


The trick is to pay yourself first.

Before you pay rent or your utility bill, before you buy groceries, and long before you pay for dinner and a movie, the first bill you should pay is to your own savings or retirement account.

When you save a little money at the beginning, it won't be there for you to spend at the end. It's a little mind trick that makes saving less daunting. Save from the top of the pile; not the bottom.

If possible, make this payment to yourself automatic. Out of sight means out of mind. You won't even realize you're saving money.

Online banking from Starion Financial is a great tool for paying yourself first. Use the new scheduled transfer feature to automatically deposit money into your savings from another account. Schedule the transfers monthly or twice monthly to correspond with your paycheck.

Another option is to ask your banker to set up an automatic transfer from your checking to savings soon after your paycheck is deposited. You can call or visit your banker any time to change the amount you're saving.

Ask a Starion Financial personal banker about savings tools that can help you. 


How much should you save?

Don't be afraid to start small, especially if you're just starting in your career or haven't been disciplined about saving in the past. You could start by saving just 1% of your income each month. You'll probably be surprised how easy it is and choose to save more.

Whenever you get a raise or pay off a loan, pay yourself a little bit extra each month. You'll save more money without noticing a change to your lifestyle because you weren't used to having that extra money each month anyway.

Try as soon as you can to save 10% of your monthly income. When you're ready, save 20% to 30% and you'll help guarantee yourself a comfortable retirement. Remember that money you deposit in an employer-backed retirement plan such as a 401(k) counts toward your personal savings percentage.