Set forth below is a Guest Blog Entry by Mike at the Financial Facts blog. I do NOT agree with the take put forward by Mike here. — Rob
There are many different ways to budget, each offering their own ways of ensuring (in theory) that more comes in than goes out each month. One of these ways is working around the pay-yourself-first budget, generally considered one of the more conservative ways of setting out a financial plan. It involves deciding what you want to save each month, then setting side that amount before making any more spending decisions. The remainder is free to be spent however one wishes. Although this can be difficult to stick to, it’s also believed to be one of the most popular, with many people swearing by it.
Of course, every type of budgeter is likely to have certain traits – so, for a bit of fun, we’ve been thinking of some we’ve noticed. If you know anyone with any of the following traits, chances are you’ve got a pay-yourself-first budgeter in your midst.
1. They refuse to confirm for days out
No self-respecting pay-yourself-first budgeter will commit to spending money before they’ve put their savings aside. So don’t expect them to confirm for a big night out or weekend in the sun before they have – they’ll usually ring last minute when they realise they’ve got the cash.
2. They’re rarely frivolous with money
While everyone wants to make sure they’re spending within their means, these types of budgeters can take it too far the other way and never take any risks. While some will get a good credit card deal and borrow money to spread the cost of a big purchase, a classic pay-yourself-first would rather save up for a few months for a big holiday or new dress than have it right here, right now.
3. They won’t always stand their round at the bar
If they’re in their savings week, forget about getting a drink back from a pay-yourself-first budgeter. If they’ve already accounted for their savings, perhaps you might just be lucky enough to get a pint back.
4. They’ll call in their debts quick
Given that they’re obsessed with saving regularly, and won’t make any spending decisions without putting their money aside, they’ll be quick to call in that tenner you owe them to ensure they’ve got the maximum amount to put towards whatever they please once all bills are accounted for.
5. They’ll be attracted to cashback credit cards
Anything that can put a few quid back into the pocket is likely to be lapped up by your average pay-yourself-first budgeter. So credit card offers on cashback cards are likely to prove attractive, ensuring that the money left over to spend is maximised to its full potential.