5 Ways to Pay Your Future Self

You probably have good intentions to save more money, but when discretionary funds are available, it’s oftentimes more tempting to enjoy a dinner out or buy something you want. 

And while it is important to enjoy a treat now and again, it’s equally as important to pay your future self.

What do we mean by that? Paying your future self is a money-saving strategy that prioritizes saving for your future needs. It’s ensuring that someday—in the near or distant future—when you have a financial need, funds are there to see you through.

Let’s explore five ways you can pay your future self.

1. Pay Off Debt

Paying down your debt—especially high-interest debt—in a timely manner will help reduce the amount of total interest you end up paying. This frees up money that you can save for the future. Check out these four strategies that can help you knock out your credit card debt once and for all.

2. Save in an Emergency Fund

Experts say you should aim to save three to six months’ worth of expenses in your emergency fund. Whether you have a surprise car repair or unexpectedly find yourself in-between jobs, your emergency fund can be there to help you weather financial storms.

3. Buy Insurance

The right insurance policies can help protect you against financial loss from unexpected events. Most people are familiar with health insurance, automobile insurance and homeowners’ insurance, but there are other types of policies that could pay your future self:

• Supplemental health insurance, such as critical illness insurance or hospital insurance, can help protect you from coverage gaps in your major medical insurance. If you face illness or injury, these policies pay cash benefits directly to you that you can use for any need. You could use them to help cover deductibles, copayments, coinsurance and everyday living expenses.
• Long-term care insurance can help protect you from one of the greatest expenses you could face in your life: long-term care. A policy can help protect your savings and help you maintain control of where you will receive care.
• Life insurance pays your loved ones a death benefit after you’re gone, but did you know that the right policy can also pay your future self? That’s because some policies build cash value that you can borrow against in the future for any need.
• Annuities are insurance contracts designed to help you accumulate money for retirement, protect what you’ve saved, or turn your retirement income into an income stream. 

4. Save for Retirement

Saving for retirement is the ultimate example of paying your future self. That’s because once you quit working, you’ll quite literally pay yourself from your savings. Retirement-specific accounts like IRAs and 401(k)s provide incentives to save for retirement. They can give you tax breaks on your savings either now or in the future when you withdraw funds. And if your company offers 401(k) matching, be sure to save at least until you receive the full match.

Related: Strategies for Boosting Retirement Savings in your 50s and 60s

5. Paying Into a Health Savings Account (HSA)

An HSA is a savings account that allows you to stash away pre-tax money to pay for qualified medical expenses. If you have a high-deductible health plan, you can open a Health Savings Account (HSA) and set aside pre-tax income to cover health care costs that your insurance doesn’t pay. For the 2024 tax year, the maximum contribution amounts are $4,150 for individuals and $8,300 for families. And if you’re 55 or older, you can add up to $1,000 more as a catch-up contribution. HSA funds can also be used to pay for the costs of long-term care and long-term care insurance premiums.

Want more? Check out our blog, The Downside of Crowdfunding for Medical Bills: 7 Options to Try Instead.

Colonial Penn is here for you!

Colonial Penn has specialized in making life insurance simple and accessible by offering it directly to consumers since 1957. Click here to learn more.