As a society, we have been taught to spend every penny we make, so it is not surprising to learn that over 50% of Americans live paycheck-to-paycheck. For many of us, these habits are destroying our chances of having any sort of financial freedom and financial peace.
This is a dangerous trap, and it’s time to get out!
The key to achieving financial freedom is simple – PAY YOURSELF FIRST!
Now is a great time to review my previous Smart Money Tips for ways to create and find more money.
Paying yourself first begins with these three simple steps:
- Set up a savings account. This account needs to be separate from your checking account or any other account that you use to pay bills.
- Identify how much you want to save. This should be a specific percentage of every single penny you bring in. Shoot for 10% minimum, but if you can do more, that’s great!
- Create Saving Categories or “Money Buckets.” These categories or “buckets” are what you are saving your money for. Be sure to set goals for each one!
Here are a few tips:
- The key is to start a savings plan – even if you have debt! I have a very simple process for paying down your debt and while you are doing this, so you end up saving and building up your money buckets at the same time as you pay off debt.
- Create Your Money Bucket Form by creating categories for any short-term savings goals you might have.
- The first Money Bucket category you will want to set up is your Emergency Fundor Money Cushion. Your goal is to put something away from every check until you have one month worth of expenses set aside. Then you work to build up two months, then three months, until you have six months saved up.
- Create other Money Bucket categories such as saving for a car down payment, or repairs, holiday shopping, family vacation, The key is to SAVE this money rather than put it on a credit card which will require you to make payments and pay interests. This is a huge step in changing the credit card and paycheck-to-paycheck cycle.
- Complete the Expense Tracking Form from my Smart Money Tip #5. This will help you identify how much of a Money Cushion you need. Remember, this amount should be equal to one month of living expenses.
- Save a specific percentage from each check.If your goal is 10%, then if your check is $1,000, you will save $100. It your check is $100, then you will save $10.
- Use the Money Bucket Tracking Form to split up and track how you are saving. For example. If you have $100 to save, you can decide how you want to break that up. It could be $50 to Money Cushion, $25 to Car Fund and $25 to Vacation or Holiday Fund. You decide where and how much you want to add to each Bucket.
Paying yourself is a gift to YOU. If you get sick, lose your job, business slows down, or if you have unexpected expenses, you will have a Money Cushion. This will help you sleep at night and give you more confidence and freedom.
Remember, it’s not the amount you save, it’s the action! The action itself will raise your energy level, your confidence, and your self-worth. Your Self-Worth = Your Net Worth.
Spend less than you make and pay yourself FIRST starting today!
If you haven’t checked out our FREE course yet featuring my signature six-step system called, Unlock Your Financial Power: They Key To Health, Wealth & Happiness, be sure to do that now by clicking here for immediate access!
Katana Abbott, CFP® practitioner, is a Life and Legacy Coach™, host of the Smart Women Talk Radio™, founder of the Smart Women Companies with over 1 million subscribers globally, inspirational speaker and author of several books.
She began her financial planning career in 1987 and became a Certified Financial Planner™ practitioner. In 2003, Katana created Smart Women’s Coaching® to offer financial coaching and educational workshops for women in transition who are dealing with caregiving, death of a loved one, divorce, retirement or looking to create or grow a business. She founded Smart Women’s Empowerment in 2008 to bring free financial empowerment resources and programs to women around the world through her team of Contributing Experts. www.katanaabbott.com