• Michael Wellings

Treat 'Yo Self!


Ah, payday. That miraculous, beautiful day when the bank account looks so amazing, you can’t help but smile when you look at it. It’s really too bad that that feeling never lasts. Here’s a question we sometimes ask our clients: “When you look at that bank account and realize you’ve been paid, what’s the first thing you want to do with your momentary riches?” Most times, we get one of two answers. The first is something we like to call the “Treat ‘Yo Self” mentality, and the second is “Payment Roulette”.

Kids nowadays say the darndest things, don’t they? On a personal basis, just recently I was visiting home, spending time with some young cousins, contemplating whether or not I wanted to drive out to Sonic for an Oreo Blast (a guilty pleasure of mine). As I mentioned my mental struggle, one of my erstwhile companions looks at me and says, “Michael, you’ve had a long day, you need to treat ‘yo self.” Instantly, the grammar nerd inside me mentally corrected him with, Treat YOURself. Not ‘Yo self. But that’s beside the point. What my little cousin suggested to me is what many, many people do when they first get paid. They splurge. On ice cream, on fine foods, on alcohol, you name it. They splurge because they know that after they pay every bill, there’s not going to be room in the budget for fun expenses. Obviously, this type of mentality isn’t entirely conducive to saving money or other goals, but it is very prevalent in today’s society. With the advent of the Internet, where results for problems and desires are virtually instantaneous, people seek and desire instantaneous pleasure. They don’t want to put off treating themselves to a cold beer or nice dinner, so they do it when they can. On payday. Who cares if you can’t quite make the budget?

On the other hand, some people jump right into thinking who they need to pay first when they get that paycheck. Undeniably, mortgages, cars, and utilities are incredibly important. After those monthly payments, people think about the budget, where money goes to groceries, gas, and other miscellaneous things. Finally, after all those things, people wonder how they’d like to spend that tiny fraction of money left. We call this, “Payment Roulette”, because each of those things HAS to be paid, it’s just a matter of what/who gets paid first. No matter what happens, money goes out of your bank account and into someone else’s.

Both of these strategies have different pitfalls, but there’s one common victim: YOU. Let’s be honest, if you splurge, the only one who profits is you, but only momentarily. After that night out, you’re in trouble. Similarly, after you play payment roulette and send all that money out the door, it’s difficult to set money back in an effective way because there simply isn’t that much left. You didn’t adapt the budget to spend less on food or gas, etc. So, what can you do? How can you turn a lose-lose into one big WIN? It’s easy. Use both of the strategies.

Again, the problems with the two strategies above are that they either only benefit the present situation, or don’t benefit you at all in a meaningful way. The solution to this problem is this: Treat ‘yo self by paying yourself first. What we mean by that is simply this: On payday, before you do anything else, put money into an investment vehicle that will pay you LATER. A retirement fund, a simple savings account, anything that garners you growth. In this way, you’re splurging on yourself and also paying yourself first, before anyone else. This will have incredible benefits for you in the long run. Do you work for a company that matches 401(k) contributions? Max that thing out!

These are just a few things you can do to pay yourself first. There are undoubtedly many other places to put your money, and some may suit you better than a 401(k) or an IRA. All we ask is that instead of squandering your money each payday, treat ‘yo self by paying yourself first. You’ll thank us later.

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