FINANCE: How Old-Fashioned Advice Changed My Financial Life

When I was in my twenties, I lived like most of my peers: from paycheck to paycheck.

I figured if there was any kind of emergency, either my health insurance or my credit card could handle it. No savings account? No problem.

Any money that I earned that didn't right away go to pay bills went towards my social life, clothes and shoes, or vintage cars. (Okay, I may be the odd duck with that last one, but everybody has their thing.) Accumulating debt wasn't even on my radar.

I was fortunate back then that my plan of not having a real plan for an emergency fund or savings worked out okay and that I never really needed one. Pretty soon, though, along came kids and a house and all of the other things that accompany settling down and taking on more responsibility.

My credit card bills felt like anchors. The fact that I had no savings started to make me twitchy. It was time to get real, to look the scary idea of living paycheck to paycheck for the rest of my life directly in the face, and to do something about it before it was too late.

In researching my best options for getting rid of debt and accumulating savings, I came across one old-fashioned piece of advice over and over again. That advice?
 
Pay yourself first.

That's right. Set up your budget each pay period or each month and determine how much of your income you can spare to go towards your goal (savings, travel fund, emergency fund, credit card pay-off, etc.) and pay towards that goal right away.

You don't have to make big bucks for this to work, either. My husband and I were raising two kids and barely making the minimum payments for our credit cards when we first got serious about building an emergency fund. In order to pay ourselves, we cut out as much as we could and immediately applied those savings to our emergency fund and didn't touch it again. As little as $5 or $10 here and there can have an amazing snowball effect on your motivation!

Once we had tucked away a few hundred dollars, saving became almost like a competition with ourselves. We sold lots of things on eBay and Craigslist and added those funds to our emergency fund, sometimes even competing with one another to see who could get a buyer first or pull in higher profits.

There were even days where we'd pay ourselves for not going out on weekends and instead staying home to declutter. ("We hauled a car full of donations to Goodwill today instead of going on that brewery tour? Looks like we deserve forty bucks!")

As simple as it seems, paying yourself first really does work. It tells your brain that your goals are every bit as important as your bills.

Your Turn: Have you applied this advice to your own finances? How did it work for you? Is there another old-fashioned or tried-and-true recommendation you would make for reaching financial goals?