The Last to Get Paid

Money in, money out. Every month you play the number game. Your paycheck gets auto deposited in your bank account and goes out to the rent, utilities, credit card or student loans.

If there is anything left over after everyone else has been paid, you might throw some extra into your savings account.

Bills first, Fun next, Savings last.

You might even have a savings goal: 6 months of expenses as a safety net or saving for long term goals like a down payment on a house or even early retirement.

But what if I told you that you shouldn't pay your bills first every month? What if I told you that the order should be

Me first, Bills next, Fun last?

When asked, most people will agree that saving money is critically important. Emergency funds give peace of mind and if we ever want to retire someday we have a retirement goal. But very few save money. Saving money is hard when we want things NOW.

Getting into the habit of saving is easy if you make a few simple changes. The first step is to pay yourself first.

Paying yourself first means that savings takes priority over bills and fun. But it doesn't have to hurt each month if you set it up right. Paying yourself first can be as easy as saving money in your IRA account. That money is taken out of your paycheck and never makes it into your bank account. If you never see it, you (a) can't spend it and (b) don't miss it. It removes the temptation to skip out on your savings to get things that you want now.

Paying yourself first is the first step toward developing good financial habits. Here are four ways to make paying yourself first as painless as possible:

1. Start a 401(k) and/or Roth IRA

If your employer offers a retirement savings plan, enroll as soon as possible. Take full advantage of any employer matching contributions. That is the freest money you will ever get! The maximum contribution changes year by year and contributions are tax deductible. Win win!

2. Have an Emergency Fund

Open an online savings account with a bank that is not your primary bank and don't get a debit card for this account. By having a separate bank account at another bank, you won't see that money every time you check your checking account balance and won't be tempted to raid that pot of gold every time you check your balance. Set an auto transfer to yourself the same day as your paycheck comes in.

3. Open Short and Mid Term Goal Accounts

Why stop at one savings account? It is easy to have three, four, five or more accounts at an online banking institution. Most allow you to give them nicknames too. We already talked about the Emergency Fund. But how about some more? Vacation Vault, House Down Payment, Home Renovation or even Medical Deductible. Once your Emergency Fund is full, these accounts are a great way to organize your money into separate short and mid term goals. The downside is that these accounts typically pay very low interest rates, so...

4. Diversify

Set aside the bulk of your savings for investments that will provide a higher return than the interest you would generate from a savings account. This could be anything from a side hustle, to investing in stocks or even peer to peer lending.

It all starts with taking a stand and putting your financial well being ahead of everything else. These tips can make saving as painless as possible. Remember, a year from now you will wish you started today. So get started!