We hear this everywhere in the personal finance world: Pay Yourself First. But what does that really mean? And how does it apply with your time?

What Paying Yourself First Looks Like

We hear this everywhere in the personal finance world: Pay Yourself First. But what does that really mean? And how does it apply with your time?

We hear this old adage everywhere in the personal finance world. Clearly, it’s also being largely ignored judging from the current financial status of most Americans. But I’ll throw it out there as one of the most important things you should be doing to manage both your money and your entire life:


Paying yourself first goes back to realizing what your true goals are and actively making them a priority in your life.

Paying Yourself First in Money

Paying yourself first in personal finances refers to setting aside money as soon as you receive it, rather than waiting until you see what remains at the end of the month. It’s a proactive approach that emphasizes your saving is an expense that is just as high of a priority as your other monthly bills.

David Bach’s best-selling book The Automatic Millionaire belabors this point on 250 pages of text (a book I love but think honestly could be summarized in just a few pages). However, the simplicity of the concept is why this book is a favorite among thousands of great personal finance books. It’s as easy as this: just find a way to pay yourself first, then you can freely spend the rest and still be financially successful.

It’s easier said than done, though, in a society that favors the new and flashy over money in the bank (at least I’m hoping you’re not going around flashing your money around…!).

You’ll notice this savings priority in the spreadsheet I’ve created for the mini-class in budgeting. Here’s a quick preview:

Notice in the budget that right after income, the next thing listed is savings goals. Even more specifically, the first thing listed is savings for an emergency fund. This is no coincidence that this is listed very first!

I’m a firm believer that managing your money can be one of the single most important things you can do to build a life that you love. Living on the edge without savings for emergencies and future retirement fosters anxiety and uncertainty in your life. Life during an emergency situation without adequate savings or reaching retirement without adequate funds will be sure to trigger much stronger emotions of regret and fear.

Related Post: Change Your Financial Situation, Change Your Life

Now is the perfect time to start saving if you haven’t already started. And likely, if you haven’t started saving then you haven’t been using the pay yourself first method.

Here are the steps I suggest that you take to begin paying yourself first:

STEP 1: Create a budget if you don’t already have one. We are talking about a realistic budget here, not a bare-bones budget that will make you pinch your pennies every single day of the year. You want to get an accurate view of how much you really have to put toward savings on a regular basis.

STEP 2: Set concrete savings goals based on your budget as well as your own financial priorities and goals. These savings goals will not be adjusted based on how much you end up actually spending during the month. They will be taken out first before your spending occurs. You will have to reduce your spending and not your savings if your finances take a turn for the worse due to unexpected events. This is the KEY.

STEP 3: Automate those savings payments. Emergency fund savings can be directly deposited through payroll to a separate account from the one you use to pay your regular bills. Alternatively, you could set up an automatic ACH transfer, which is free between most banks (you can see a list here). 401(k) retirement savings are generally made directly from your paycheck and IRA contributions can be set up to be automatically transferred to your brokerage firm. It’s best if these automated payments are correlated with your paychecks so that you see that money as little as possible before it is put toward your saving goals.

If you’re the carefree type that doesn’t want to set a monthly budget and track your expenses, you especially will benefit from this system. It’s important to create that initial budget to see how much you can realistically save, but after you set up automatic transfers for those savings its okay to just spend the rest (but no more…debt’s a topic for another day!).

Even if you’re the type of person that is hands-on with your finances, tracking your expenses and creating all kinds of spreadsheets to make sure you’re on track with your financial goals, even you can benefit from automating your investments to ensure that saving occurs before spending.

However, to really improve your life, paying yourself goes beyond just personal finance to all areas of your life.

Paying Yourself First in Time and Energy

It seems as though I’ve jumped from one incredibly busy thing to the next without a break after graduating from high school. It started with me working one and then two jobs while going to college full-time. Then I transitioned to full-time employment while studying for the CPA exam. The same week that I finally received my CPA license, my first child was born. Time has become an elusive commodity since that moment.

It took me quite a while, but I’ve finally realized that I’m never going to magically have more extra time (or sleep!). Sure, my older kids are now at school and my littlest goes to preschool twice a week, but my responsibilities have increased as well plus I feel like I’m still catching up tasks that weren’t done in the past few years (seriously, I’m still in the process of moving in although we actually physically moved into our home in July!).

Similar to realizing that it’s not a good idea to save what’s left after a month’s spending is over, it’s also not a good idea to spend your time doing the monotonous tasks first and then using the remaining time that’s left for your other goals.

Time is far more important than money. In fact, what does money really mean anyway if you don’t have time to enjoy it? Does it really make sense either to use up all your energy on things that just aren’t that important?

Related Post: Time’s Not Money, Its Life

In the past few months, I’ve focused on fitting my big priorities in before starting on my menial tasks such as doing the dishes and cleaning the house. A couple of these things include starting my day by reading scriptures or other uplifting messages and exercising every day. I won’t lie and say that the other things are still getting done as well as they were before, but I absolutely feel like my time is being well-spent. I also ultimately feel much happier about how I’ve spent my time and motivation.

If you’re thinking this is about prioritizing your time, then you’re absolutely correct. And the steps to getting to paying yourself first with your time are surprisingly similar to the steps we discussed in paying yourself financially. Here goes:

STEP 1: Create a list of the necessary tasks to keep your household and life running, ideally with times that the tasks occur. These include things like getting ready in the morning (7:30-8:30), commuting to work (8:30-9:00), your full-time job if you have one (say 9:00-5:00 if you’re lucky), commuting home from work (5:00-5:30), making and eating dinner (5:30-6:30) and so on.

STEP 2: Set concrete goals for your life priorities such as exercising, making healthy meals instead of getting takeout, meditation and spending time with friends and family. You can use your New Year resolutions as a start for this list.

STEP 3: Automate those tasks by setting absolute times in your schedule that you will not allow being taken by other less meaningful responsibilities. For example, if you determine that you will wake up an hour early to exercise (say 6:30-7:30), then don’t allow yourself to get distracted by using this time to catch up on work, emails or other things. If you want to prioritize spending time with family, make a set time that it will happen. For example, have an extended family dinner each month on the first Sunday of the month.

It may take a while to create these habits, but you have to start somewhere!

Final Thoughts

I think for me, it’s easier at this stage to prioritize paying myself first in money than it is in time, but both are essential to a well-balanced life. Money, time and energy are all connected more than we often realize.

What are some specific ways that you pay yourself first?



9 Responses

  1. It took me awhile to finally understand the point of paying myself first but now that flipped my mindset it’s definitely invaluable. I can’t imagine not paying myself and forcing myself to adjust my expenses around what I truly value.

    BTW…you are a rock star if you received your CPA license the same week as your child was born. That exam is no joke and the time requirements are crazy. Great story!!!

    1. Yes! I can’t believe some of the ridiculous things I used to spend money on now that I clearly see it. Oh well, I have plenty of years left to make up for it!
      Having a baby was probably the best thing I could have done to get myself motivated to get all the CPA requirements out of the way. I knew if I didn’t pass any parts of the exam I was going to have to be trying them again with a newborn. I did complete all the requirements several weeks before she was born, I just actually received my official license in the mail that week! 🙂

  2. It’s crazy to think that just a year ago I had no budget and no emergency savings. I would wait until the end of the month to see what I had left over (which was basically nothing) then pat myself on the back. Having my savings taken directly out of my paycheck every two weeks has really helped me to stick with the plan, and I am almost to my $1000 goal! I just bought a planner to keep myself on track, and I’m hoping it was a good decision.

    1. Once you know how much peace of mind it gives you have money in savings, you never want to go back to living paycheck to paycheck, that’s for sure! Sounds like you’re doing an amazing job paying yourself first and it’s paying off for you-awesome!

  3. I just started paying myself first (in money!) a few years ago. For me, what has worked is saving specific streams of income. Since I’m self-employed my income comes from several different places and I had 4-5 of those automatically sent to savings. This has worked better for me than anything else I’ve ever tried.



I’m Kathryn Hanna-wife, mother of 3 and a Certified Public Accountant. I love to budget (really, I do!) , build spreadsheets and spend money on travel, sewing supplies and good chocolate.


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