This Money Fix Works Even If You've Never Budgeted Before

Have you ever tried to stick to a budget and given up after a few weeks? You’re not alone. Tracking every expense isn’t realistic for everyone, especially if you’re juggling work and family. The good news is that you don’t need a detailed budget to start saving.

One of the budgeting strategies you can use is called ‘pay yourself first.’ Here’s how the strategy works and how you can make it a habit.

Pay Yourself First

The majority of the people save backwards. They pay bills, spend on groceries, dine out and then save whatever remains at the end of the month. In most cases, there’s usually no spare cash left. 

Paying yourself first flips the script. Instead of saving what remains after you spend your paycheck, you move a set amount into a savings or investment account as soon as you get paid. In short, saving becomes the first bill you pay to yourself. You can then spend what’s left on everything else.

Start Small

You don’t need to save a huge chunk of your paycheck. Starting with any amount or 1% of your paycheck, can go a long way.  You can gradually increase the amount as your expenses decrease or your income increases. 

Consistently matters more than the amount you save. It’s better to save a small amount consistently than trying to save a large amount and giving up after a few months.

Automate

We are humans and trying to stay disciplined can be hard, especially when money is involved. That’s why setting up a recurring transfer from your checking to a savings account on payday is important.

If your employer offers split direct deposit, you can send a portion of your paycheck straight to your savings so it never touches your checking account. Money you don’t see is cash you don’t spend. 

You don’t want your money to just sit idle but to work harder for you. Direct the amount to a high-yield savings account to earn interest.

The Bottom Line

Creating a budget is smart if you stick to it. But if budgeting hasn’t worked for you in the past, don’t wait until it does. Paying yourself first can help you build a savings habit. Start with a small automatic transfer every payday and grow your savings without feeling like you’re following a complicated budget. 

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.