We’re all familiar with a certain set of pressing financial responsibilities—making mortgage payments, putting food on the table, buying that new set of snow tires so the family can stay safe on the road…In the face of these obligations, the idea of “paying yourself first” might seem like a fantasy—nice to think about, but ultimately unrealistic, and maybe even unimportant.
What does paying yourself first mean? It means putting money aside in a savings or investment account regularly, the same as you would pay your rent or a mortgage payment, no matter what your "wants" are for the month.
Making these contributions is the best way to ensure your long-term financial health. It means taking your real future needs into account. It means looking at the big picture, not just the bills that are pressing or the new toy you’ve been eyeing. Think of “paying yourself” as a priority—a few years down the road, you’ll be glad you did.
Here are our top three tips on paying yourself first.
1. Set up a PAC (pre-authorized contribution).
A pre-authorized contribution to a savings or investment account is a great way to pay yourself painlessly. Just like an employer’s tax or pension deduction on your paycheque, it enables you to put money away each month without even thinking about it—and you can set up a PAC to coincide with your regular payday too.
2. Save that “surprise” money.
Are you anticipating cash gifts from relatives? An end-of-year bonus at work? Tax return dollars? Take a portion of that windfall sum and add it to your investment account right away. There's nothing wrong with treating yourself now, but putting some away will allow you to treat yourself with the bigger things later on.
3. Take an honest look at your cash flow.
If old school budgeting isn't your style, you can easily figure out where your money is actually going by looking at your bank statements (or using the spending reports generated for your accounts in ATB Online and the ATB Personal app). You’d be surprised how much wiggle room you can find just by spending a little less on non-essentials each month. Sure, that take-out tastes good in the moment, but by putting the money into a savings or investment account, you’ll be setting yourself up for a lot more to take out in the long run.