Who: This post is for people who are unfamiliar with the concept of “pay yourself first” or those looking for ways to apply it in their everyday lives.
What: This post discusses a basic personal finance concept of “pay yourself first.” The post outlines ways you can prevent yourself from living from paycheck to paycheck and how to increase your savings.

Most people familiar with even the most elementary concepts of personal finance have heard of “paying yourself first.” The concept is simple. Whenever you receive a paycheck or payment of some sort, before you pay your bills, and let all of the money disappear into thin air, pay yourself first. Put some money away in the bank, even if it’s a few dollars a week. Starting is the key. You’ll find plenty of sites that mention the concept, but this post is meant to show you how you can actually make it happen.

1) The Change Jar - This one’s a good concept, especially if you don’t use credit cards much (which I can’t condone). The utility will vary depending on how much or how little you use cash, but it is sure to add up. You just need to make sure that you never pay for anything with change. Whenever you purchase something with cash, always use paper money and save the change. At the end of the day, empty the change in your wallet into the cup. That’s it.

In one semester, I managed to fill up 2 beer pong cups. Here on A Financial Revolution, a “Beer Pong Cup” is the standard unit of measurement for volume. For those of you unfamiliar with this widely used standard, we have provided an illustration.

DRINK!

Did you know that 1 beer pong cup can easily hold ~$50 worth of change? At the end of the semester, either roll the coins yourself, or do what I do. Take the cup to a coin star machine (Which charges you 8.9% if you just want cash) and get an Amazon.com Gift Certificate! The CoinStar machine won’t charge you anything for giving you an Amazon.com Gift Certificate. Considering you can find pretty much everything on Amazon, think of it as money off your next purchase of pretty much everything.

2) Bill Yourself - So once you’ve paid your bills, you have almost nothing left? If this is the case, then you will have no way to ever save up money. One approach is to find an amount that you can COMMIT to paying YOURSELF first. Treat this payment as a bill and pay it first, EVERY month. If you end up not having enough money to pay one of your bills, FIX IT.

How? Let’s say you commit to paying yourself $50 a month. At the end of the month if you pay yourself and then pay all your bills, maybe you end up $25 short. Your goal is to find $25 in your regular spending to cut out. Eat out a few less time, get rid of those extras on your phone plan, cut out those extra cable channels, conserve electricity.

You need to promise yourself to make paying yourself a priority. You need to keep your promise. And you need to cut out spending that prevents you from keeping your promise. You need to pay yourself BEFORE paying all your other bills.

3) Automate It! - Don’t give yourself a chance to take your payment to yourself and use it elsewhere. Find a way to have the money deducted automatically. You can set up an online savings account or even a savings account at your local bank and have your payment to yourself automatically deducted from your paycheck and direct deposited into the account. You’ll be surprised how this little strategy can add up quickly.

Now that you know how to pay yourself first, are you going to do it? I would like to think that if you’re taking the time to read this, you will. But if not, just read the post on compound interest to see how much you could be missing.

4) Abstinence Is the Best Protection - Against unwanted spending. Find the little things that you do everyday or on a regular basis, that cost you a buck, or two, (or $5 if you like Starbucks). If you want to be an all-star, and the item you spend your money on (coffee, candy, newpaper) is unnecessary, just cut it out of your schedule completely. Take the money you would have spend on it and put it in your BPC. If you’re a littler fainter of heart, then you can try to cut back 50%. This may mean getting that candy bar only once every OTHER day, or it may mean buying a SMALL coffee instead of a Super Mega Grande Mocha Frappalattecino. When you look at your cup at the end of the month, you’ll be in for a pleasant surprise.

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