Pay Yourself First
It’s family before self for most Singaporeans, as this article in The Sunday Times, 29 October 2017 reported.
Pay yourself FIRST. Whether you belong to the sandwiched generation or not. This is one of the key principles of personal finance and it has significant impact on your financial future.
What does ‘pay yourself first’ mean? It means paying into your own savings and investment accounts first before settling other bills.
- Feed your emergency fund
- Contribute to your investment plan
- Pay into your savings plan/retirement income plan/annuity
- Buy adequate insurance, including critical illness insurance and long term disability care
- Pay off your debts and avoid new ones, except for mortgage or reasonable business loan
When you prioritise these accounts over and above all other bills, this approach will increase the likelihood of you actually saving a substantial amount.
It is similar to this protocol when we travel in a plane – when the oxygen masks are activated, the parent should first put on his mask before attending to the child. If the parent is not protected, how then is he capable of helping the younger one?
I am sure you would not want to end up being a financial burden to your loved ones just because you had neglected your own financial planning. Aspirations and financial goals need not be abandoned when we are able to strike a balance in our financial commitments.