Saving money at an early age is essential to ensure financial security in the long run. But in order to do that, it’s important to adopt the mindset of “pay yourself first”—that is, to prioritize saving money before spending it.
It’s easy to be tempted to splurge and spend money on things you want in the moment. But when you get into the habit of “paying yourself first”—by putting a significant portion of each paycheck into your savings account—you will be more likely to achieve your financial goals in the future.
The earlier you start saving, the more you’ll benefit in the long run. When you save money at a younger age, you can take advantage of compound interest. This means that when you invest money, you’ll earn interest on the principal amount plus any interest that has already been accumulated. Over time, this can result in a substantial return on your investment.
Additionally, paying yourself first and saving at an early age can help you resist the pressure of consumerism. Many people go into debt because they want to keep up with their peers and acquire the latest “things”. However, by paying yourself first and building up your savings, you can avoid the urge to impulse buy and instead use your money towards more meaningful goals, such as buying a home, funding a child’s education, or retiring early.
The most important thing to remember when it comes to “paying yourself first” is to make sure that you are committing to a realistic and manageable budget. This means setting aside a certain amount of money each month to fund your savings account. You can even create automated transfers so that a portion of your paycheck is placed directly into your savings and investment accounts each month.
Creating a budget and “paying yourself first” can be intimidating at first, but it will be well worth it in the long run. When you start saving money at an early age, you’ll be able to achieve financial security and have greater peace of mind for the future. So be bold and start investing in yourself today!
Rob Siegmann is a partner and chief operating officer of Total Wealth Planning, a fee-only fiduciary financial planning firm in Cincinnati (Blue Ash), Ohio. He is often quoted in industry publications such as The Cincinnati Business Courier, Wall Street Journal, Yahoo finance, Financial Planning Magazine, Cincinnati Enquirer as well as others. Rob is grateful to serve others, including his team of CERTIFIED FINANCIAL PLANNER™ practitioners and the clients they serve, so they can live their greatest life through well informed and prudent financial decisions. Rob can be reached at firstname.lastname@example.org.