Category: Savings & Money Management

  • The Importance of Savings and Paying Yourself First

    Money comes and goes—but the habits we form around it define whether we live with financial freedom or constant stress. Among the most powerful financial principles you can adopt is deceptively simple: pay yourself first.

    This approach flips the typical budgeting mindset. Instead of spending your paycheck and saving whatever is left, you save first, then use what remains for expenses. By treating savings as non-negotiable, you create a foundation for wealth, security, and peace of mind.

    Why Saving Money is So Important

    For many, savings feel like an afterthought—something to do “later” when there’s more money. But waiting for the “right time” often leads to lost years and missed opportunities.

    Here’s why savings are critical:

    • Emergency Protection: Life is unpredictable. Medical bills, car repairs, or job loss can drain you without a financial cushion.
    • Financial Independence: Consistent savings create options—whether that’s retiring earlier, traveling, or leaving a job you don’t love.
    • Wealth Building: Compound interest rewards the early saver. Even small, consistent amounts snowball over decades.
    • Peace of Mind: Knowing you have money tucked away reduces anxiety and helps you focus on long-term goals.

    In other words, savings aren’t just numbers—they’re freedom.

    The Pay Yourself First Method Explained

    The pay yourself first budgeting method is the cornerstone of smart money management. Instead of waiting to see what’s left over, you prioritize your future from the start.

    Here’s how it works:

    1. Decide Your Percentage: Common advice is to save at least 10–20% of your income. Adjust higher if you want to build wealth faster.
    2. Automate Savings: Set up direct deposits or automatic transfers so the money goes straight into savings before you can touch it.
    3. Allocate Across Goals: Divide savings between emergency funds, retirement accounts, and long-term investments.
    4. Spend the Rest: Live on what’s left. By structuring life around savings, you avoid lifestyle inflation.

    This method is so powerful because it removes willpower from the equation. You don’t have to “remember” to save—it happens automatically.

    Pay Yourself First vs Traditional Budgeting

    Traditional budgeting looks like this:

    • Income → Expenses → (Maybe) Savings.

    The problem? Expenses tend to expand to match income. Many people discover at the end of the month there’s nothing left to save.

    The pay yourself first approach flips the formula:

    • Income → Savings → Expenses.

    This forces you to live within your means while ensuring your financial goals are on track.

    The Benefits of Paying Yourself First

    1. Builds Discipline Without Strain
      When savings are automated, it feels effortless. Over time, your spending naturally adjusts.
    2. Accelerates Wealth Creation
      Every dollar saved today works for you tomorrow. It’s like planting seeds that grow into a forest.
    3. Prepares You for Emergencies
      An emergency savings account means one setback doesn’t spiral into debt.
    4. Future-Proofs Retirement
      By consistently contributing to retirement accounts, you secure a more comfortable future.
    5. Shifts Your Mindset
      You stop living paycheck to paycheck and start thinking like an investor in your own life.

    Practical Tips to Start Paying Yourself First

    • Automate Transfers: Schedule them for payday so you never “see” the money in your checking account.
    • Start Small if Needed: Even saving $50 a month builds momentum. Gradually increase as your income grows.
    • Separate Accounts: Use a dedicated savings account to avoid temptation.
    • Name Your Goals: Label accounts “Emergency Fund,” “Travel Fund,” or “Retirement” to stay motivated.
    • Revisit Annually: As your income grows, increase your savings percentage.

    Overcoming Common Excuses

    “I don’t make enough to save.”
    Start small. Even $20 per paycheck builds the habit and proves you can do it.

    “I’ll start when I make more.”
    The truth? More money often means more spending. Savings habits must come first.

    “What if I need the money right away?”
    That’s the point. An emergency fund exists for the unexpected. Think of savings as self-insurance.

    Automating Your Financial Future

    Automation is the secret weapon of the pay yourself first method. By setting up recurring transfers, you make savings effortless. Over time, you won’t even notice the money leaving your checking account—but you’ll see the results in your growing balances.

    Consider splitting automation into multiple accounts: one for emergencies, one for retirement, and one for lifestyle goals. This way, your money works in multiple directions simultaneously.

    Final Thoughts

    The importance of savings and paying yourself first cannot be overstated. It’s not just about money—it’s about control, freedom, and peace of mind.

    Every time you pay yourself first, you’re making a statement: My future matters as much as my present.

    You don’t need to be wealthy to start—you just need to start. The earlier you adopt this principle, the stronger your financial foundation becomes. And years from now, you’ll thank your past self for making savings a priority.

  • The Secret to Saving Money: How One Woman Built Wealth on a Modest Income

    One of the most inspiring financial stories isn’t about lottery winners or trust fund babies—it’s about ordinary people doing extraordinary things with discipline and focus. One story that stands out is that of Sherelle Derico, a single mom who’s steadily building her way to financial independence on a modest income.

    Despite never earning more than $55,000 a year, Sherelle is well on her way to becoming a millionaire. Her story reminds us that saving money isn’t about how much you make—it’s about how committed you are to keeping it.

    A Real Example: How Sherelle Did It

    Sherelle Derico, now a senior consultant at Booz Allen Hamilton, turned her life around after hitting a low point with debt. Here’s a glimpse into her financial transformation:

    “I found myself in lots of debt. That’s when I started to save a lot of money,” she said in an interview.

    Over time, Sherelle:

    • Paid off $25,000 in student loans, credit cards, and personal debt
    • Funded most of her master’s degree with cash and employer matching plans
    • Began receiving $700/month in child support (only five years ago)
    • Saves 20% of her income into her 401(k) and IRA
    • Treats saving like a non-negotiable monthly bill

    Currently, she has:

    • $95,000 in her TIAA-CREF retirement account
    • $36,000 in her Booz Allen 401(k)
    • $8,000 in regular savings

    That’s over $130,000 saved—by someone earning an average income and raising a child on her own.

    What’s the Real Secret?

    It’s not about budgeting apps, flashy investment tips, or waiting for your next raise.

    It’s this: Sherelle treats saving as seriously as paying the mortgage.

    She’s adamant. She doesn’t wait for the “perfect moment” or for more money to magically appear. She prioritizes saving now—and that discipline creates freedom later.

    The habit of saving money starts the moment you realize:
    If you don’t pay yourself first, you’ll always be paying for everything else—forever.

    Saving Must Become a Priority—Not an Afterthought

    Think about how you treat your biggest bills—your rent, your mortgage, your car payment. You never miss those, right?

    But what about your future self?

    If you find yourself saying things like:

    • “I’ll start saving after my next vacation.”
    • “I’ll wait until I get a raise.”
    • “There’s just not enough left over to save.”

    …then it’s time to flip your thinking.

    Start saving before you buy the big-screen TV. Before the weekend getaway. Before upgrading your phone. None of those things are bad—but they should come after you’ve paid yourself.

    Start Small, Build Big

    Saving doesn’t have to start with a massive overhaul. Like most things in life, it’s about small wins that build momentum.

    I know someone who recently decided to get serious about saving. In less than two months, they managed to put away $4,000. Now, they can clearly see $5,000. Then $10,000. And beyond.

    Where could you be in five years if you started today?

    Ask Yourself the Hard Question

    Here’s a gut check:
    What if you had to save $10,000 this year to save your spouse’s life?

    No loans. No credit cards. Just saving. Could you do it?

    You already know the answer: Yes, you’d find a way.

    That level of urgency—that emotional commitment—is what separates people who talk about financial freedom from those who achieve it. Sherelle Derico had it. So do others who have made saving a lifelong habit.

    Do You Really Want It?

    A lot of people say they want to be financially free. But when it comes to doing the work—sacrificing today for tomorrow—many fall short.

    So here’s the real question:

    Are you just going through the motions, or are you emotionally committed to improving your financial life?

    It comes down to choice. Every dollar has a destination—you just have to decide if that destination is your future or someone else’s profit.

    Final Thought

    No matter where you are today—deep in debt, paycheck-to-paycheck, or already on the path—you start with one small win. Then another. Then another.

    That’s how momentum builds. That’s how mindsets shift. That’s how financial independence becomes a reality.

    So pay yourself first. Save like it’s your most important bill. Because one day, it will be the difference that changes your life.