Paying Yourself First

Paying yourself first is a financial philosophy pushed by financial experts and for good reasons. Paying yourself first ensures you are amply buffered as you go forward your financial journey.

Do you always split your paycheck towards rent, groceries, gas, mortgage, taxes, education, healthcare and fun and entertainment right away? Where do your personal savings and emergency fund fit into your budget? If this has been your financial activity for so long now, you probably have noticed money leaks here and there that prompted you to charge your credit card or take on a loan instead of pulling cash from your own reserves. That is because you basically don’t have the cash reserve in the first place.

However, if you try to put savings first before anything else, you can be sure that you’ll always have the funds you need for whatever it is you’re saving for – emergencies, down payment for a vacation etc. In the world of personal finance, this is called paying yourself first.

Paying yourself first provides you the cushion or buffer so that if anything should occur, you are ready to face it financially. For instance, you unexpectedly need a plane ticket home for a family emergency. Since this expense is unexpected it is obviously not in your budget. So how do you pay for such ticket when you don’t have the money for it? That is where paying yourself first comes in. You can pull the amount out of your savings or emergency fund and get this crisis settled once and for all.

While loans with poor credit aren’t comparable to your own personal savings or emergency fund, they could double this purpose in certain situations. If you have just depleted your own funds and you suddenly need money for a plane ticket for instance, loans with poor credit can cover that for you for the meantime. In emergency cases, having the fastest and easiest funds to pool is so critical and knowing that you can do so with loans with poor credit provides significant comfort.

By using loans with poor credit conservatively, you stand the chance of not incurring unnecessary debts and are able to get your financial house in order as soon as you can. Always consider loans with poor credit as your last option and push them away from your mind unless you have the real need for bad credit loans.

You should also keep in mind the consequences that come with attaining such loans. Like all other types of loans, loans with poor credit are also charged with interest, albeit a higher than the traditional loans carry. If you intend to take loans with poor credit for a cash emergency, do take your time shopping for lenders. Some lenders may carry outrageous interests but careful and thorough shopping for loans with poor credit should land you a deal that’s most affordable.

If you have been putting savings as the last allocation when budgeting, it’s good to start reversing that process now. By ensuring that you always pay yourself first, you are also building a more solid foundation of finances for yourself. You are better secured and protected knowing that your own funds are there whenever the need arises. Meanwhile, they can keep growing as you consistently pay yourself first.

Moreover, prevent using loans for unnecessary and frivolous expenses. Instead, reserve them for urgent financial needs. Take comfort that loans with poor credit are just there, ready and always at your disposal, but you don’t have to use them if you don’t really need to.