Pay Yourself First: A Simple Strategy to Make Saving a Habit

What does “pay yourself first” mean?It means prioritizing your savings and investments before spending money on your other monthly expenses.

For many people, the traditional approach to money looks something like this: pay the mortgage, utilities, credit cards, groceries, and other bills—and then save whatever is left over.

The problem?There may not be much left.

Instead, make saving a priority by setting aside money for your futurebeforedeciding how much you have available to spend. Think of your savings as another monthly obligation—one that benefits you.

How Does Paying Yourself First Work?

The concept is simple:

1. Determine how much you can reasonably save each month.
2. Set up an automatic contribution to a retirement, investment, or savings account.
3. Treat that contribution like a bill that gets paid every month.
4. Increase the amount over time as your income or financial circumstances change.

Automating your contributions can make saving easier because you don't have to make the decision every time you get paid. The money is set aside before you have a chance to spend it elsewhere.

What If I Don't Have Enough Money to Invest?

You don't necessarily need thousands of dollars to start investing.

Depending on the account and investment options available, you may be able to start with a relatively small amount. Even$25, $50, or $100 a monthcan help you establish a consistent savings habit.

The important question isn't simply, “How much can I invest right now?” It's also:“What amount can I consistently set aside, and how can I increase it over time?”

As your income changes or certain expenses decrease, consider increasing your contributions. Small increases can add up over many years.

Why Is Paying Yourself First Important?

Paying yourself first can help turn saving from something youhopeto do into something you do consistently.

It can also help you:

• Build long-term savings habits
• Contribute consistently to retirement or investment accounts
• Reduce the temptation to spend money that you intended to save
• Take advantage of time and potential investment growth
• Increase your savings as your financial circumstances change

Of course, how much you should save—and where you should put it—depends on your income, expenses, goals, time horizon, and overall financial situation.

How Much Should You Pay Yourself First?

There isn't one savings amount that works for everyone.

The goal isn't necessarily to save a large amount immediately.The goal is to establish the habit and build from there.

Make Your Future a Monthly Priority

Saving doesn't have to start with a dramatic change to your budget. Sometimes, the most powerful step is simply making yourself part of the monthly financial equation.

Automate it. Make it consistent. Increase it when you can.

Your future self should be one of the first people you pay every month—not the last.