When it comes to budgeting, there’s no shortage of advice out there. If there’s one tip that stands out above the rest for making a real difference in your financial life, it’s this: Pay yourself first.

What Does “Pay Yourself First” Mean?

Paying yourself first means making sure you prioritise savings and investments before any other expenses. Instead of paying everyone else first and then waiting to see what’s left over at the end of the month to put into savings, you set aside a predetermined amount as soon as you get paid.

Why Is This Tip So Effective?

1. It Creates Consistent Savings Habits

One of the biggest challenges in budgeting is maintaining a consistent savings routine. It's easy to let savings fall by the wayside when unexpected expenses arise or when you simply spend more than planned. By paying yourself first, you automate your savings and make it a non-negotiable part of your budget.

2. It Reduces the Temptation to Overspend

By allocating a portion of your income to savings or investments right away, you’re left with less income to spend on other things. This reduces overspending and impulse buying.

3. It Prioritises Your Financial Goals

We all have financial goals, whether it’s building an emergency fund, saving for a house deposit, or investing for retirement. Paying yourself first ensures that these goals are funded before anything else.

How to Implement the “Pay Yourself First” Strategy

1. Set Clear Financial Goals

Before you can pay yourself first, you need to know what you’re saving for. Set clear financial goals, whether it’s an emergency fund, retirement savings, or a dream holiday. Having specific targets will make it easier to determine how much to set aside each month.

2. Determine the Amount

Decide on a percentage of your income that you’ll pay yourself first. Start with 10% of your income and then slowly build up from there. The key is to choose an amount that’s both challenging and realistic.

3. Automate Your Savings

The easiest way to ensure you pay yourself first is to automate the process. Ask your employer to pay your chosen amount to a separate savings or investment account on payday. By automating your savings, you remove the temptation to skip a month.

Paying yourself first is the #1 budgeting tip that can truly change your financial life. By prioritising your savings and investments, you set yourself up for long-term success and ensure that your money is working for you, not the other way around. Start today, and watch as this small shift in mindset leads to big rewards.