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Build the habit · Lesson 2 of 10

Pay Yourself First: Save on Payday, Not With Leftovers

Put savings at the top of your plan and move it on payday, with an if-then plan and a small first amount.

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THE WRITTEN LESSONFollow along at your pace

Most people spend first and save whatever is left, if anything. In this lesson you flip the order, so saving happens at the start of the month, not with the leftovers at the end. It is general information, not financial advice.

Flip the order

Spending first and saving what is left gives saving the weakest place in your plan. So write savings as a line at the top of your plan, next to rent, and not at the bottom as a hope.

Two lists side by side. The left list, Spend, then save what's left, has Rent, Phone, Food and Fun with an empty jar crossed out at the bottom. The right list has Savings on the top line above Rent, Phone and Food, with a jar labeled Paid first and a check mark.(opens the full-size picture)
Same bills, new order: savings goes on the top line.

Saving is a bill

Treat saving like a bill that is paid on payday. Money guides in several countries suggest the same thing: make savings one of your regular expenses, and move it on the day your pay arrives.

A stack of bills labeled Rent, Phone and Food with a Savings bill on top, next to a calendar page marked PAYDAY. Labels read Paid on payday and Money guides agree.(opens the full-size picture)
Savings sits in the stack with the other bills.

Make an if-then plan

Make it a plan with an if and a then: if I open my banking app on payday, then I move the savings amount first. A plan like thisimplementation intention: A plan in if-then form that ties a specific action to a specific situation, such as 'if it is nine o'clock, then I open the report.' It hands the decision about when and where to act to the situation itself.Full entry in the glossary decides the moment and the action in advance. In a large review of studies, plans written in this if-then form helped people follow through.

A card with IF I open my banking app on payday and THEN I move the savings amount first, next to a phone. Below it, the label A large review of studies: If-then plans help you follow through.(opens the full-size picture)
Name the moment, then name the action.

YOUR TURN

Start small

How much? Start small. Even a small amount can give some security. One teaching rule suggests saving 20 percent of take-home pay, as part of a 50 percent needs, 30 percent wants and 20 percent savings split. It comes with a warning: not everyone can follow it, so treat it as a rule for teaching, not a target you must hit.

A jar with a few coins labeled Even a little helps, next to a pie chart split into 50 percent Needs, 30 percent Wants and 20 percent Savings, labeled A teaching rule, with a warning chip: Not everyone can follow it.(opens the full-size picture)
A small amount counts. The 20 percent rule is for teaching.

If your pay is uneven

If your pay changes from month to month, pay yourself a steady salary. Let every payment land in one holding account first. Then move a fixed sum to your everyday account on the same date each month, and keep the rest as a buffer.

Coins of different sizes drop into a Holding account. Dashed arrows lead from it to an Everyday account, marked Same sum and Same date, and to a Buffer, with the label Pay yourself a steady salary.(opens the full-size picture)
Uneven money in, steady money out, the rest kept as a buffer.

An honest note

No study has tested paying yourself first against saving what is left. It is a practical method that money guides agree on, not a proven rule. Automatic transfers, which you will meet in lesson four, are the same: practical, not tested.

A card reading Not tested in a study with a red cross, a checklist clipboard, and the labels A practical method guides agree on and Not a proven rule.(opens the full-size picture)
A useful habit, honestly labeled.

Read more

Read the full lesson script

In this lesson, you'll learn to pay yourself first: to save at the start of the month, not with whatever's left at the end.

Most people spend first and save whatever is left, if anything. So flip the order. Write savings as a line at the top of your plan, next to rent, not at the bottom as a hope.

Treat saving like a bill that's paid on payday. Money guides in several countries suggest the same thing: make savings one of your regular expenses, and move it on the day your pay arrives.

Make it an if-then plan: if I open my banking app on payday, then I move the savings amount first. In a large review of studies, plans written in this if-then form helped people follow through.

How much? Start small. Even a small amount gives some security. One teaching rule suggests saving twenty percent of take-home pay, but it comes with a warning: not everyone can follow it.

If your pay changes from month to month, pay yourself a steady salary. Let every payment land in one account first, move a fixed sum to your everyday account on the same date each month, and keep the rest as a buffer.

One honest note: no study has tested paying yourself first against saving what's left. It's a practical method that money guides agree on, not a proven rule.

So remember: savings goes at the top, payday is saving day, and start small. Before the next lesson, write your payday if-then plan with a small amount. Next, you'll find money to save in what you already spend.