Young Professionals: Pay Yourself First
Are you a young professional wondering how to start investing long-term after building up a solid emergency fund? Or are you wanting to build up that emergency fund? Being a young professional myself, I found it difficult to know where to start. Of course, you can do a quick google search and figure out that it would make the most sense for a young professional to open an IRA or a brokerage account, or maybe even consider using a robo-advisor. However, it is tough to brainstorm ways in which you can do this successfully. We have this new-found sense of financial security that we’re not necessarily used to having or didn’t have in college. Some of us may need help fighting the urge to spend our paychecks and take a more aggressive savings approach.
I am here to do just that: provide you with a trick that can help you start investing in your future while simultaneously enjoying your new life. Consider depositing your paycheck/ current funds into your investment or savings account and “pay yourself” the amount you need to live comfortably each month to your checking account.
Giving yourself that predetermined amount you need every month gives you a sort of psychological mindset that you can only spend x amount of money, or you will run out that month. Even better, whatever is not spent can be carried over to the next month for a little extra surprise to treat yourself with. If you wanted to be even more diligent, you could put the leftovers into your investment or savings account. You would be exceeding your financial expectations and still living comfortably.
When we say pay yourself first, we really mean save first, spend later. Living below your means as a young professional will pay excellent dividends in the future.