pay yourself first
You’ve heard it before—pay yourself first. But for many, this advice goes in one ear and out the other, drowned out by the immediate demands of bills, rent, subscriptions, and everything else that eats up your paycheck. Here’s the harsh truth: if you’re not paying yourself first, you’re prioritizing everyone else’s wealth over your own.
Paying yourself first means treating your savings and investments as non-negotiable expenses, just like your rent or car payment. It’s a simple shift in perspective that ensures you’re working toward financial growth, not just surviving paycheck to paycheck. Let’s break down why paying yourself first is critical and how to implement it.
What Happens When You Don’t Pay Yourself First
When you don’t prioritize saving and investing, you’re left with whatever’s left over after covering your expenses—and let’s be honest, there’s rarely much (if anything) left.
1. You Save What’s Left (Which is Usually Nothing)
Most people approach saving and investing backward. They pay all their bills, handle daily expenses, and then hope there’s something left to save. Spoiler: there often isn’t.
📖 Example: If you wait to save after covering your Netflix subscription, dining out, and impulse buys, you might be left with $20 at the end of the month—if you’re lucky.
🔑 Takeaway: Saving what’s “left” rarely works because most of us spend what we see.
2. You’ll Find a Way to Cover Bills, But Not Savings
When bills are due, people find a way to make it happen. Whether it’s working overtime, cutting back, or scrambling to borrow, there’s a sense of urgency. But when it comes to saving, there’s no immediate consequence for skipping it.
📖 Example: If you’re $100 short on rent, you’ll hustle to cover it. But if you save $100 less this month? You’ll shrug it off and promise to "make it up next time."
🔑 Takeaway: Without paying yourself first, saving is treated as optional—and optional doesn’t build wealth.
3. You Stay Stuck in the Rat Race
When you spend every paycheck on bills and living expenses, you’re working to maintain someone else’s bottom line—your landlord’s, your utility provider’s, your credit card company’s. You’re stuck running in place, building nothing for yourself.
📖 Example: Paying $1,500 in rent, $300 on a car loan, and $200 on credit cards might keep you afloat, but it won’t help you escape the rat race.
🔑 Takeaway: If you’re not saving, you’re just working to live—not to grow.
Why Paying Yourself First is Non-Negotiable
1. You’re Prioritizing Your Future
Paying yourself first shifts the focus from maintaining your current lifestyle to building a better future. It ensures that every paycheck contributes to your growth.
📖 Example: If you save $300/month from age 25 to 65 at an 8% annual return, you’ll have over $900,000. Without paying yourself first, that future disappears.
2. It Forces Discipline
When you automate savings or investments as your first "bill," it becomes a fixed expense. You adapt to what’s left and adjust your lifestyle to fit your remaining income, not the other way around.
📖 Example: If you allocate 20% of your paycheck to savings, the rest naturally covers bills and spending—forcing you to live within your means.
3. You Build Wealth Without Thinking About It
Automating your savings and investments removes the guesswork and temptation. Over time, your wealth grows effortlessly, thanks to consistency and compounding.
📖 Example: Automating $200/month into an ETF tracking the S&P 500 can grow to over $73,000 in 20 years at an 8% return—even if you never increase your contributions.
How to Pay Yourself First
1. Decide How Much to Save
Start with a percentage of your income—10% is a good baseline, but 15–20% is even better. Adjust based on your goals and budget.
📖 Example: If you earn $3,000/month, saving 15% means putting aside $450 before covering anything else.
2. Automate the Process
Set up automatic transfers to your savings or investment accounts immediately after payday. This removes the temptation to spend and ensures consistency.
📖 Example: Your paycheck hits on the 1st, and on the 2nd, $300 is automatically transferred to your Roth IRA or savings account.
3. Prioritize Tax-Advantaged Accounts
Max out accounts like your 401(k) and Roth IRA before focusing on taxable investments. These accounts help you grow wealth faster by reducing or eliminating taxes.
📖 Example: Contributing $500/month to a Roth IRA ensures tax-free growth, maximizing your future wealth.
4. Build Your Budget Around What’s Left
Once you’ve paid yourself first, use the remainder of your paycheck to cover bills, groceries, and discretionary spending.
📖 Example: If your paycheck is $2,500 and you save $500, the remaining $2,000 becomes your budget for the month.
The Power of Paying Yourself First
When you pay yourself first, you’re prioritizing your growth and freedom over everyone else’s. Instead of working to cover bills and survive, you’re working to build a future where money works for you.
📖 Example: Saving $300/month over 20 years at an 8% return results in over $177,000. If you don’t pay yourself first, you’re likely to save far less—or nothing at all.
🔑 Takeaway: Every dollar you save and invest today is a step closer to financial independence tomorrow.
Conclusion: Invest in Yourself First
Paying yourself first isn’t just a financial strategy—it’s a mindset shift. It prioritizes your future, builds discipline, and ensures that every paycheck moves you closer to financial freedom.
Start today: Automate your savings, commit to a percentage of your income, and build the habit of putting yourself first. Over time, you’ll see the results in your growing portfolio—and the freedom it creates.
