Because you deserve to be first in line for your own money
What Does “Pay Yourself First” Actually Mean?
Let’s start with the basics. “Pay yourself first” doesn’t mean you literally hand yourself cash like you’re your own employer (though that would be pretty cool). It means that before you pay anyone else – your landlord, Netflix, that friend who always “forgets” their wallet – you set aside money for your future self.
Think of it this way: every month, you’re essentially running a small business called “Your Life.” And just like any smart business owner, you need to pay yourself before you pay everyone else. Otherwise, you’re working for free while everyone else gets paid from your labor.
The traditional approach to money goes something like this: earn money, pay all your bills, buy what you need, have some fun, and then save whatever’s left over. The problem? There’s usually nothing left over except lint in your pockets and regret about that impulse purchase.
Why Your Brain Fights Against Saving
Here’s some real talk: your brain is not designed to be good with money. Our ancestors worried about immediate survival – finding food, avoiding predators, not getting kicked out of the cave. They didn’t need to think about retirement accounts or compound interest.
The Instant Gratification Monster Your brain sees money in your account and thinks, “Ooh, shiny! Let’s buy something fun right now!” It doesn’t naturally think, “Let’s set this aside for Future Me, who will be super grateful in 30 years.” This is why waiting until the end of the month to save rarely works – your brain has already spent that money a hundred different ways.
The Scarcity Mindset If you grew up in a household where money was tight, your brain might be programmed to spend money quickly when you have it, fearing it might disappear. This survival mechanism served a purpose once, but it can sabotage your long-term financial health. Remember, habits and tradition are some of the hardest things to break. They are built over time, so it will take time for you to develop new habits and traditions to the point that it becomes automatic.
The “I Don’t Make Enough” Trap Here’s where it gets tricky. Sometimes you genuinely don’t make enough to save after covering basic needs. But sometimes your brain tricks you into thinking you don’t make enough when you actually could save small amounts. The pay-yourself-first principle helps you figure out which situation you’re really in.
Here’s the thing, we sometimes confuse need with want. The reality is that today, we need the internet, but we don’t need 125 channels of cable TV or 10 streaming services. However, it’s easy to convince ourselves that we need those channels. Even though we can’t (and never) watch them all. For five years after I left home, I didn’t have cable TV. Back then, it was about $50 a month for basic cable. But I went without it for 5 years and it didn’t even seem like I was living without. Ultimately, I saved enough money to buy my first home. You want to talk about need? A roof over my head and something that was building wealth for me was a real need. Obviously, I could have continued renting, but 3 years later, that little condo I saved up to buy was worth $40,000 more than when I bought it. Think long term, not short term!
The Psychology Behind Why It Works
Automation Beats Motivation Motivation is unreliable – it shows up when you’re feeling good and disappears when you’re stressed or tired. Paying yourself first through automatic transfers means your savings happen whether you’re feeling motivated or not. It’s like having a responsible financial assistant who doesn’t call in sick.
You Adapt to What’s Available This is the magic part: when you automatically save $100 from each paycheck, you learn to live on what’s left. Your lifestyle adjusts to your available spending money. Trust me, this works. It’s like when your favorite restaurant raises prices – you grumble at first, but then you adapt and keep going there anyway.
Building the Identity of a Saver Every time you automatically save money; you’re reinforcing the identity of being someone who saves. This identity shift is powerful – instead of being someone who “tries to save but never has money left over,” you become someone who “always pays themselves first.” Your actions shape your identity, which then influences future actions.
The Compound Interest Superpower
Let’s talk about why starting early matters so much, even with small amounts. Compound interest is basically money having babies, and those babies having babies, and so on. It’s the closest thing to magic in the financial world.
The $25 Monthly Miracle If you’re 22 and you save just $25 per month in an account earning 4% annually (compounded monthly), you’ll have over $34,000 by age 65. That’s $13,200 of your money that grew into $34,000 thanks to compound interest. Your money literally worked harder than you did. Now, imagine, if you increased your monthly savings amount as you moved up the corporate ladder? Want to really blow your mind? What if you invest in something that offers you a higher rate of return?
The Procrastination Penalty Wait until you’re 32 to start that same $25 monthly savings? You’ll have about $20,600 by 65. That 10-year delay cost you about $14,000. This is why “I’ll start saving when I make more money” is such an expensive mindset. The one thing you cannot get back is time! Today si the best day to start.
Why Time Beats Amount Someone who saves $50 monthly starting at age 20 will have more money at retirement than someone who saves $200 monthly starting at age 35. Time is more powerful than amount when it comes to building wealth.
How to Actually Make This Work
Start Stupidly Small Forget about saving hundreds of dollars right away. Start with an amount so small it feels almost ridiculous – maybe $10 or $25 per paycheck. The goal isn’t to get rich quick; it’s to build the habit and prove to yourself that you can live on slightly less money.
Make It Automatic Set up an automatic transfer from your checking account to your savings account for the day after you get paid. Don’t rely on remembering to do it manually – you’ll forget or talk yourself out of it when the cable bill is due.
Hide It From Yourself Open a savings account at a different bank from your checking account. Make it slightly inconvenient to access. Don’t get an ATM card for that account. Make it harder to get to. That’s what I did with my credit union account. You want enough friction that you won’t casually dip into it for pizza money, but not so much that you can’t access it in a real emergency.
Track Your Progress There’s something deeply satisfying about watching your savings grow. Check your balance regularly, celebrate milestones, and remind yourself that this money represents choices and opportunities for your future.
Making It Work on Different Income Levels
If You’re Making Minimum Wage Start with $10-15 per paycheck if possible. That’s roughly $25-30 per month, which might not sound like much, but it’s building the most important financial habit of your life. Focus on the behavior, not the amount.
If You’re Making $30,000-50,000 Aim for $50-100 per paycheck. This should feel slightly uncomfortable but not impossible. If you can swing it, try to save any raises, bonus checks, or tax refunds before your lifestyle inflates to match your income.
If You’re Making $50,000+ You should be able to save at least $200-300 per month, possibly more. This is where the pay-yourself-first principle can really accelerate your wealth building. Consider increasing your savings rate with every raise.
When Pay Yourself First Isn’t Realistic
Let’s keep it real – there are situations where paying yourself first genuinely isn’t feasible, and it’s important to acknowledge this without shame or judgment.
When You’re in Crisis Mode If you’re choosing between rent and food, saving money isn’t your priority – survival is. Don’t feel guilty about not saving when you’re in genuine crisis mode. Your first job is to stabilize your situation. You may need to put that automatic deposit on hold or reduce the amount until the crisis is over.
High-Interest Debt Emergency If you have credit card debt with interest rates above 20%, paying that off usually takes priority over saving. The guaranteed 20%+ “return” from eliminating high-interest debt beats most investment returns. But make sure you’re not incurring more debt along the way, if possible. Otherwise, you’ll always be raiding your savings o pay off credit cards. Trust me, it can become a vicious cycle.
Unstable Income Situations If your income varies dramatically month to month (hello, gig economy), you might need to focus on building income stability before committing to regular automatic savings. However, you can still apply the principle by saving a percentage of good months.
Major Life Transitions Starting a new job, moving cities, going through a divorce, or dealing with medical issues – these transitions often require financial flexibility that regular automatic savings might prevent.
Modified Approaches for Tough Situations
The Percentage Method Instead of saving a fixed dollar amount, save a small percentage of whatever you earn. Made $200 from freelance work this week? Save 5% ($10). This scales with your income and works for irregular earners.
The Windfall Strategy If regular monthly savings isn’t possible, commit to saving windfalls – tax refunds, birthday money, overtime pay, cash gifts. It’s not as powerful as regular saving, but it’s better than nothing.
The Debt-First Hybrid Pay minimum payments on all debts, then split any extra money between debt repayment and savings. Maybe 70% to debt, 30% to savings. This builds the saving habit while still tackling debt aggressively.
The Emergency-Only Approach If you can’t commit to long-term savings, focus solely on building a small emergency fund first – even $200-500. This prevents small emergencies from becoming debt emergencies.
Common Obstacles and How to Overcome Them
“But I Have Debt!” Unless it’s high-interest credit card debt, you can often save and pay off debt simultaneously. Many financial experts recommend building a small emergency fund first, then tackling debt, then serious long-term saving.
“I Don’t Make Enough” Track your spending for a month. You might be surprised where money is going. Could you save the money you spend on daily coffee? Streaming services you barely use? Subscription? Impulse purchases? Sometimes we don’t make enough, and sometimes we just haven’t looked closely at our spending.
“What If I Need the Money?” This is where emergency funds and longer-term savings serve different purposes. Your emergency fund is for genuine emergencies. Your pay-yourself-first savings are for opportunities and long-term goals. Having both gives you financial flexibility without sabotaging your future.
“I’ll Start When I Make More Money” This is the most expensive lie we tell ourselves. There will always be a reason to wait – more debt, higher expenses, life changes. The best time to start was yesterday. The second-best time is today, even with a tiny amount.
The Ripple Effects of Paying Yourself First
Confidence in Decision-Making When you have money saved, you make decisions from a position of strength rather than desperation. You can leave a bad job, negotiate better terms, or take calculated risks because you have a financial cushion.
Breaking Generational Patterns If you come from a family that lived paycheck to paycheck, building savings breaks that cycle. You’re not just changing your financial future – you’re modeling different possibilities for siblings, cousins, and eventually your own children.
Reduced Financial Stress Money stress affects everything – your health, relationships, job performance, and overall happiness. Having savings reduces the constant low-level anxiety that comes with financial insecurity.
Opportunities Become Possible Want to start a business? Go back to school? Make a career change? Move to a new city? All of these require some financial cushion. Paying yourself first makes opportunities possible instead of just dreams.
Advanced Strategies Once You Get Started
The Automatic Increase Set up your savings to increase automatically each year, maybe by $10-25 per month. You’ll barely notice the change, but your savings will grow significantly over time.
The Raise Strategy Whenever you get a raise, immediately increase your automatic savings by half the raise amount. This prevents lifestyle inflation while still letting you enjoy some of the extra income.
Multiple Goals, Multiple Accounts Once you’re comfortable with basic saving, you might open different accounts for different goals – emergency fund, vacation fund, down payment fund, retirement. This makes your goals feel more concrete and achievable.
The Investment Transition Start with simple savings accounts, but once you have a solid emergency fund, consider investing your long-term savings in low-cost index funds for better growth potential.
When Life Gets in the Way
Job Loss If you lose your job, pause your automatic savings temporarily – this is exactly what emergency funds are for. Resume saving as soon as you have stable income again, even if it’s a smaller amount initially.
Major Expenses Big car repairs, medical bills, or other major expenses might require temporarily reducing your savings rate. That’s okay – adjust and get back on track as soon as possible.
Income Reduction If your income drops, reduce your savings amount rather than stopping completely. Saving $10 per month keeps the habit alive until your income recovers.
The Long-Game Mindset
It’s Not About Perfection You don’t need to save the same amount every month forever. Life happens, circumstances change, and your savings rate should adjust accordingly. The key is maintaining the overall habit and mindset.
Progress Over Perfection Saving something is infinitely better than saving nothing. Don’t let perfect be the enemy of good. If you can only manage $15 per month right now, that’s still $180 per year that you wouldn’t have otherwise.
Building Financial Resilience The real goal isn’t just accumulating money – it’s building financial resilience. The ability to handle surprises, take advantage of opportunities, and make choices based on what’s best for you rather than what you can afford.
Your Future Self is Counting on You
Every dollar you pay yourself first is a gift to your future self. It’s saying, “I believe you deserve security, opportunities, and choices.” It’s refusing to sacrifice your long-term well-being for short-term wants.
Your future self won’t remember most of the things you bought impulsively, but they’ll definitely remember the financial security you built through consistent saving. They’ll remember the stress you prevented, the opportunities you made possible, and the example you set.
The pay-yourself-first principle isn’t just a financial strategy – it’s a statement about your worth and your future. It’s declaring that you matter enough to invest in, that your dreams are worth working toward, and that your financial well-being is a priority.
Start Today, Even Small You don’t need to wait for the perfect amount, the perfect job, or the perfect circumstances. You can start today with whatever amount feels manageable. Set up that automatic transfer, even if it’s just $10. Your future self will thank you for starting, not for waiting until you could start perfectly.
Remember Your Why Connect your saving to your bigger goals and dreams. Maybe it’s financial security, the ability to help your family, starting a business, or simply never having to choose between rent and groceries. Keep these motivations visible and remind yourself regularly why you’re making this choice.
The higher you want to rise, the stronger your financial foundation needs to be. Paying yourself first isn’t just about money – it’s about building that foundation, one automatic transfer at a time.
Ready to pay yourself first? Set up an automatic transfer today, even if it’s just $10. The hardest part is starting, and your future self is rooting for you to begin. By the way, I’m rooting for you too!