You may have heard the saying “Pay yourself first” and are not very sure what to make of it. 

Well, then you came to the right place, I’ll try to the best of my abilities to explain what it means by paying yourself first. As the key phrase suggests… It means you should pay yourself before proceeding to pay off the loans, credit card bills, and other expenses.

This habit will prepare you emotionally to live with whatever is available after saving, by saving an amount for yourself first and limiting the amount available in your account for the spending spree, you let your mindset have the feeling that there is not so much left for the month to spend.

Why should you pay yourself first?

Before we go into the specifics of how to pay yourself and to the other nitty-gritty, first let’s understand the importance of paying yourself first.

Paying yourself by saving and investing, you are essentially creating a safety net to protect yourself from any unexpected expenses that arise from different financial situations like medical emergencies or other short-term financial crunches.

This money saved can also be used for the different planned expenses too. It helps with short-term goals and long-term goals. If you continuously pay yourself regularly, you will be slowly paving your stepping stones to financial freedom.

If you do not build this habit of paying yourself first, you may also end up spending your money on unnecessary items and wonder where the monthly paycheck credited for the month has gone and will have to wait for the next month’s paycheck to arrive.

How to pay yourself first?

Now that you understand the reason why you should pay yourself first, let’s find out how to make this work and what are the steps involved in doing it structured and efficiently.

Open a separate account from your expense account

The first thing to do is to open a separate account from your salary crediting/expense account. It is to create segregation between the money you can use for regular spending and the money you set aside for a rainy day. 

Set up an automatic deduction from the salary account 

Once you have set up your new account, create an automatic deduction of the fixed monthly savings amount from your salary credit account.

Most of the banks have these automatic fund transfer mechanisms, in case your bank does not have such a feature, remember to do this task manually as soon as the salary is credited.

Spend only what is available after saving

Now that you have set aside the money for saving, the rest is for you to spend on your mandatory spending. Do remember to pay the mandatory expenses like your loans, credit cards, utility bills, etc before you spend on the discretionary items.

This way, you will ensure that the bank and your creditors are not chasing after you at the end of the month.

How to pay yourself if you are drowning in debt?

If you are currently paying lots of debt and especially those with bad debts, it is not sound financial advice to save so much and pay yourself, this is because you may be losing money as a net effect of paying the interest.

If you are wondering what is good and bad debt or how to escape from bad debt, please check out my previous post about good and bad debt from the link below.

Good debt vs bad debt

You need to devise a plan to escape your bad debt, once you are clear of them, you may start your journey to pay yourself first and get yourself closer to financial freedom.


With the knowledge on the importance of paying yourself first and how to do so, I hope you will consider these on a serious note and put it into practice. If any points require clarification or require more details, let me know in the comments and I will address your queries.

Have fun and pay yourself first 😀



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