Have you ever found yourself in a situation where you receive your paycheck, but end up spending it all on various expenses, leaving nothing to save or invest? You’re not alone. Many people have been in the same situation. To avoid this, you can change your money management habits. One effective way is to apply the “pay yourself first” principle.
What is “Pay Yourself First”?
It’s the habit of setting aside a portion of your income for savings, emergency funds, and investments before spending on other needs. It may sound simple, but it has a big impact and benefits for the future..
Why is "Pay Yourself First" Important?
- Build a strong financial foundation:
By setting aside a portion of your salary from the beginning, you’ll have an emergency fund to handle unexpected situations like illness, accidents, or job loss. - Achieve financial goal faster:
Consistent investing can help you realize your dreams, such as buying a car, owning a house, getting married, pursuing further education, or retiring comfortably. - Avoid online loans:
Saving and investing can reduce your reliance on online or other consumptive loans.
Steps to Implement "Pay Yourself First":
- Set a financial goal:
Do you want to buy a house in 5 years, build a business, or retire at 50?
By setting your goals, you will be more motivated to save and invest and have a clear direction. - Create a budget:
Record all your monthly income and expenses. That way, you can see where your money goes and allocate it more efficiently. Reduce consumptive expenses. One way is to use the Financial Notes feature in myBCA, which provides transaction notifications and tracks financial transactions from BCA accounts and credit cards in real-time. - Open separate accounts:
Create separate accounts for necessities, savings, emergency funds, and investments. Separating accounts in their respective posts can avoid funds from being used for consumptive purposes or spending beyond the allocated budget. Use myBCA to monitor multiple accounts and portfolios within a single application. - Automate expenses:
Set up automatic transfer from your paycheck account to go directly to your savings account, emergency fund, or investments. For investments, use the Welma feature in myBCA that provides periodic purchases for Mutual Funds. For automated periodic transfers, use the periodic transfer feature in myBCA. - Make investment a priority:
Think of investing as a bill that needs to be paid every month. Don’t procrastinate; it is advisable to invest from an early age. Moreover, Welma facilitates Mutual Fund investments starting from IDR10,000!
While changing, altering habits proves worthwhile when striving for your goals. By implementing the principle of “pay yourself first”, you can enhance your financial management and pave the way for a happier life. Take the first step and start investing now with myBCA!