Pay yourself first

Training 235 minutespay yourself first

You are 34, work as an electrician and earn $3,200 a month. For years you have saved "whatever is left", and nothing is ever left. Your sister, an accountant, suggests a new order: you first, everyone else after.

Training goal: Make yourself the first bill of the month

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Situation

1. Payday. What comes first?

Pay the bills, save the rest
Move 30% to savings right away
Move 10%, $320, to savings right away

2. It is the 20th and grocery money is thin. The fridge is emptying, but there are still grains and frozen food.

Pull $150 back from savings
A week of home cooking and a shopping list
Buy groceries on the credit card

3. You have $1,400 saved at 4%. Your sister points out the $1,200 card balance at 24%. Save or pay it off?

Keep a $1,000 cushion, $400 to the debt
Keep saving, the debt can wait
Clear the card fully, keep $200

4. You get a $200 monthly raise. Your car is old but runs fine.

Upgrade the car on a lease
Change nothing, let it sit on the card
Raise your payday transfer to 13%

What you will learn

Save on payday, not at month end.
Start at 10%: real but not painful. Raise it with every pay bump.
Expensive debt goes before big savings. How much cushion to keep depends on how stable your income is.

Your real-life step

Schedule a 10% transfer to savings on payday, the first payment of the month.

Questions and answers

What does pay yourself first mean?

It means setting aside part of your income right after payday, before bills and shopping. You live on what remains.

How much should I pay myself first?

Usually 10 to 20% of income. If you have expensive debt, direct part of it to paying that down.

Where should pay-yourself-first money go?

First into an emergency fund in a separate account, then into goals and long-term investing.

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Numbers are illustrative. A game, not financial advice.