Pay yourself first when it comes to savings, retirement - FOX 32 News Chicago

Pay yourself first when it comes to savings, retirement

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ATLANTA -

Financial planning is more important than it's ever been. There are fears that Social Security won't be there when you need it, and companies rarely offer pensions anymore.

So, what is the golden rule of financial planning? Start early, and pay yourself first.

According to the financial planning group Oxygen Financial, pay yourself first means when you get paid, first take out money for savings and your 401K. Once that's done, pay your bills. Then, what is left over is your spending money. If you've paid your bills and had some fun, but don't have enough for savings, then you need to cut back on the fun.

"A scary trend we're seeing here in Atlanta, whether you earn $50,000 or make $300,000, more and more Atlanta families are living paycheck to paycheck," said Van Pappas of Oxygen Financial.

Sandra Gibson lives comfortably in retirement because she has always followed this basic rule to secure her financial future, and she's passed that great advice along to her daughter who has listened.

Pay yourself first is new to Tyler Robertson too, but he likes the sound of it.

"I would do that, most definitely. But it would have to be after college," said Robertson.

How important is it to start saving early? Let's say you are 25 years old.  You invest in your 401K only $2,000 a year for 10 years then you stop.  Now, let's say you are 35 and you contribute the same amount every year until you are 65 years old.  The 25-year-old has more money at retirement.

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