Pay Yourself First

Very often I find people get into their 30’s, 40’s, 50’s, and even 60’s and no one bothered to teach them the ONE key habit that could change their financial lives.


It is the concept of pay yourself first.

A few weeks ago we worked through your budget. After figuring our your fixed expenses and your variable expenses, you subtracted the two of them from your income and came up with some number..hopefully a positive one. If you didn’t come up with a positive one, hopefully you went back and figured out where you can make some changes in your lifestyle.

For this particular post I’m going to assume everyone has a positive number.

Now, the mistake that most people make is that they hope that number is available in their bank accounts AFTER all their spending is done. The real power of the number is making sure you save that money UP front.

So every time you get a paycheck you put your savings aside, into a separate account, hopefully where it won’t seem as accessible for you as your spending money. This way, if you end up spending too much in a specific month, it’s not your savings that takes the hit, but your eating out towards the end of the month.

Essentially, the order in which you spend the money you earn matters and it should go something like this:

  1. Receive Income
  2. Move specific/planned amount to savings
  3. Pay all fixed expenses
  4. Spend the rest of it however you originally planned
  5. Move anything left over at the end of the month to savings (consider this a bonus to yourself).


The way you stop living paycheck to paycheck and build a nest egg and build an emergency fund and maybe do a million other things… including becoming a millionaire.. is to get into the habit of paying yourself first.

Think I should trademark the phrase?