Yahoo Finance 7 Top Money Moves To Make the Day You Get Your Paycheck
It’s safe to say that we all eagerly look forward to payday. When you first receive your paycheck, it’s tempting to immediately splurge on a fancy trip to your favorite restaurant or finally buy tickets to that concert you’ve been longing to attend. It makes sense: You’ve worked hard to earn it, and deserve a little treat, right?
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But not so fast, say money experts — it’s important to curb that initial response and be more savvy with those funds. Below are experts’ top recommended money moves to make the day you get paid.
1. Automate Your Paycheck
“Paying yourself first ensures you’re consistently building wealth,” said Zach Larsen, finance and investment expert and co-founder of Pineapple Money.
Most experts agree that having an automated plan that splits your paycheck towards savings, debt obligations and an account for vacations can prevent you from being left with nothing after paying bills. You can automatically transfer a portion of your paycheck to savings, contribute to retirement accounts like a 401(k) or IRA, and build up your emergency fund.
“The more you automate, the easier your life will become and the lower your chance of unwise financial decisions with your paycheck becomes,” said Julian B. Morris, certified financial planner at Concierge Wealth Management.
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2. Create a Budget and Pay All Your Bills
With a budget in place, you can prioritize your spending and ensure that you can pay for your essential expenses like rent or mortgage, utilities, groceries and transportation. When you have a plan set up, you’ll have greater peace of mind knowing your basic needs are covered.
By tracking your spending and understanding where your money goes, you can see which areas to cut and have some money left over for savings or debt.
3. Set Specific Savings Goals
“When that paycheck rolls in, you should make [this money move] right away,” said Rob Whaley, a finance specialist at Horizon Finance Group. “Set aside some of your earnings for savings. Start building an emergency fund, stashing away enough to cover three to six months of living expenses.” This safety net can help you stay afloat in unexpected financial bumps.
But also remember to set specific goals. “Determine the purpose of your savings,” said Jeremy Biberdorf, personal finance writer and owner of Modest Money. “Whether it is a trip, the purchase of a new home or continued education,” he added, “having clear objectives makes it far simpler to maintain motivation and consistently save money aside.”
4. Pay Down High-Interest Debt
Paying off debt early in the month helps you reduce the average daily balance on your debt, which, in turn, lowers the amount of interest you accrue. “Give priority to those high-interest ones, like credit card balances,” said Whaley. “Dedicate a chunk of your paycheck to pay them down faster — lowering those interest charges can save you a nice chunk of change in the long run.”
And when you’re not paying a large portion of your paycheck towards interest charges, you’ll have more money available for other important financial goals. like saving and investing — or treating yourself. “Reducing this financial burden can save you significant money in the long run,” said Larsen.
5. Invest in Your Future
According to experts, planning for both short-term and long-term goals is the path to financial freedom. “Whether it’s contributing to a retirement account, investing in stocks or building an emergency fund, putting your money to work for you is an essential money move,” Larsen explained.
But investing in your future can also involve setting money aside for your education and skill development, which can lead to higher future earnings. Consider using a portion of your paycheck to take courses, certifications or workshops that enhance your career prospects. Or invest in that side hustle you’ve always dreamt of — the point is to put some money back into yourself.
6. Splurge a Little on Wants
Life would get dull very fast if we couldn’t spend money on the things that make us happy.
Treat yourself to a nice meal, go to the movies with a friend, go on a shopping trip — just don’t overspend. Set a budget for fun purchases, otherwise you’ll be tempted to go overboard and make buys you’ll later regret.
7. Keep Track of Your Finances
Receiving your paycheck is the perfect time to take stock of your entire financial picture. Take a moment to check your accounts and balances on loans and credit cards. Update your financial records and download transactions into finance apps. All of this will keep you on top of things and set you up for success the rest of the month.
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This article originally appeared on GOBankingRates.com: 7 Top Money Moves To Make the Day You Get Your Paycheck
