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Question for the Money Doctors

Question submitted on May 6, 2012.

Question

Financial Planners always advise income earners to "pay themselves first". My question is what items would be included in the pay myself first catagory? Would it be a savings program or be used as discretionary income?

Answer

Pay yourself first means putting money away before using your paycheck to pay any other bills. Generally this should be at least 10% of your income and by definition it is part of a savings program.

This could mean participating in the employer 401(k) plan. You can have a portion of your paycheck go to a savings account to build up your cash reserve.

This is also part of the adage "If you don''t see it, you won''t spend it."

Anything to impose a savings discipline.


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