How to pay yourself first

by Megan Kirk

(Michigan Chronicle)—Money makes the world go around, but not having any can pause everyday life. As money is needed for every aspect of day-to-day functionality, spending and saving habits become increasingly important as adults maneuver through life. Financial emergencies are inevitable and sometimes unavoidable. However, having the proper tools to save for a rainy day can help make these emergencies easier to deal with.  

Financial education continues to be spread thin, particularly in Black communities. The widening of the wealth gap, while largely based on institutional racism, can also find some truth in the spending and saving habits as well as incurring debt. Money management is best handled when the money coming in is more than the amount being spent on household and life bills. Creating a budget is a sure-fire way to chronicle income and without it, some find themselves spending more than they can afford.  

“The biggest one [mistake] is the failure to establish a monthly budget and to track their expenses and income,” said Willa Williams, co-founder of Trinity Financial Coaching, where she is a financial coach and accredited financial counselor. “When they do that, they are oftentimes not aware of how much they are spending and at times do not keep up with where their expenses are.” 

Healing finances is not an overnight feat. It will take unlearning previous bad spending habits and replace them with new techniques and ways of thinking about money. With any habit, it takes effort to overcome and financial habits are no different.  

“When making your first steps toward breaking unhealthy financial habits, it is important to intentionally relinquish all of your previous beliefs and limitations about money, and the relationship that you have with it. This will assist in being open and ready to receive and apply the skills that you learn,” said Brittany Harvey, a financial wellness professional. “The most beneficial step to take for yourself is to seek out people in the community who have the insight and financial resources that you are looking to acquire. One of the biggest blunders someone can make when making this new mental paradigm adjustment is hesitating to connect with a mentor and financial professional.”  

When considering a habit, many would not consider spending and saving to be listed. Habits are typically used to describe a negative practice, but for one financial professional, habits translate to all areas of life.  

“According to Oxford Languages, the word ‘habit’ is defined as “a settled or regular tendency or practice, especially one that is hard to give up. With that definition in mind, invite yourself to reflect on the daily choices that you make and how these decisions are directly affecting the life that you live,” said Harvey. “A ‘bad habit’ is any repetitive act that is deterring you from accomplishing your financial goals. Is it that you have not created and followed a monthly budget? Have you neglected reviewing your financial plan with a professional? Are you spending frivolously? It’s essential to remind ourselves that the daily habits that we choose to foster will determine the life that we manifest.” 

Credit cards can be helpful in establishing and building a credit score. Alternatively, failure to use credit responsibly can have a blowback effect on overall financial wellness. 

“A lot of times people will mess up credit by overspending and spending impulsively. Sometimes people look at the available amount on their credit card as cash. It isn’t cash. It’s money which is to be borrowed, but must be paid back,” said Williams. “We have to be very careful about credit.” 

Thankfully, steps can be taken to reverse the effects of negative financial habits. Enlisting the help of a financial coach can help over spenders find balance in their finances and help manage healthy ways to grow the bank account. Allocating funds for self after each pay cycle will grow personal finances and allow for a nest egg.  

“Pay yourself first. It makes so much sense because we work very hard and we want to be able to enjoy the fruit of our labor. So, set aside some money for yourself all the time so when you have the opportunity to buy the things you see you want, you can go get it,” said Williams. 

Comments

From the Web