The best piece of advice I have run across about financial planning is the importance of paying yourself first. How many people have not had the experience of getting a better paying job and realizing soon after wards that they still have no savings? It is so easy to spend all of the money that is sitting in the bank or to continue paying bills (which isn't a bad thing, don't get me wrong!) and think that there is no room in your budget for saving money.

The first step is to determine how much money you want to be able to save every month. Realistic is a key here, as if your plan is too hard to stick to, you will likely give up. Using a figure of 10%, look at how much that is of your pay, after the deductions have all come off.

Figure out what you want to do with that 10%. Is it for retirement savings? Should it go directly into a 401K or RRSP? (if you are in Canada) Is this a rainy day fund? Is this for a special project around the house or is it money being set aside for a big purchase?

Once you have determined the plan for this money, make arrangements for the 10% to come out of your bank account, before all of the other bills get paid and before you have time to spend it. Often the bank will set up a pre-authorized withdrawal for you. It will come out at the frequency you request. Your bank can also assist you with figuring out the best place to put that money. Often if it is for a special purpose, I move the money to a different bank account. Something easily accessed when I am ready to buy the new fridge or flooring. If it is as a rainy day fund, I try to get a bond, so that there is some interest, but it is still easy to access if it is needed. If it is for your retirement, a professional can help you to determine the best plan for the money, based on your years to retirement.

If you start small enough, it doesn't really hurt (because the money just disappears from the account) and it adds up quickly.

Think about this. You are worth paying before all of your other creditors.

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