Pay Yourself First

February 23, 2011

As I’ve mentioned before, my company provides courses for personal financial planning. The latest installment that I’ve taken was on Investment Planning. It talked about different investment products and strategies and what options are best for risk takers or more conservative investors.

It is something that I definitely want to allocate some extra money too when I am able to add it into my monthly budget. To start I want to incorporate one of the most basic investment strategies we talked about, Pay Yourself First.

With this strategy you save the equivalent of one hour’s pay (this may take some calculation if you are on a yearly salary), and you put that money aside before you pay your mortgage/rent/bills/groceries/etc. It’s up to you whether you want to collect this on a weekly or monthly basis, whatever works for you. Set up an automatic transfer for this before you can even think about spending it on anything else.

Instead of putting this aside into a savings account, where it won’t accumulate much interest, put this into an investment account whether it’s RSP’s, long term investments or short term investments. Go sit down with a financial planner to figure out your options. It will bring you a much bigger pay out in the future. And really, who can argue with turning a little bit into a lot more money down the road?

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