financial
The purpose behind paying your self first is to prevent yourself from the most common American financial mistake – spending everything you earn. If the money is swept out of your bank account to your real priorities first, then you cannot spend it.
Emergency funds allow us to live a life with less financial stress, encourage us to be aggressive with our investing, and allow us to avoid digging ourselves further into consumer and credit card debt.
The next place to route your paycheck is towards your retirement accounts. If you have student loans, you may consider breaking this up into two separate steps (getting your match from your 401K/403B and then directing money towards your student loans prior to putting additional money into other accounts).
For the 80% of readers graduating with student loan debt, you obviously need to automate these payments as well. If your Debt to Income Ratio (DIR) is < 1, then I recommend you refinance your student loans to get a cashback deal. If your DIR >1 (and particularly 1.5) then you should consider PSLF as a potential option.
If you have only one savings account, you are likely to raid it for unnecessary costs. However, if you had multiple savings account – say like a “Travel Savings Account” – you are much less likely to raid that money meant for Disney for a new car payment.
Your bills should be paid automatically. If you have some financial discipline, I recommend utilizing credit cards in order to accomplish this purpose. You might as well get some cash back or travel rewards points when you pay your bills.
When you start tracking your spending, you’ll likely be surprised where your money is going. However, if you don’t know, then you can’t make adjustments.