Paying Yourself First- How to trick yourself into saving money fast

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If there was just one piece of advice I could hand to you, it would be to start paying yourself first as soon as possible!

Probably the most important thing I did to create enough wealth to retire early was I set up my savings on automatic pilot and paid myself first.

Before I ever did that though, I used to promise myself to save a particular amount like $100 or $500 a month, but then I would never get around to it.

How much money are you currently saving each month?

Are you saving consistently or is it sporadic or not at all?

No matter where you are in hitting your savings goals, don’t feel alone. A 2018 survey by Bankrate revealed that only 39% of Americans have enough savings to cover a $1000 emergency. That’s scary! They also report that 36% of Americans have NOTHING saved for retirement! Yikes!!!

Saving seems simple enough, yet many fail to do it. Many families are living paycheck to paycheck and using up the entire paycheck before setting aside anything for savings.

People aren’t making savings a priority.

Spending money isn’t a bad thing, and you shouldn’t feel guilty for splurging or buying nice things for yourself. But there can be a balance, and there is a trick for making sure you get your savings goals covered.

That trick is paying yourself first

If you put away money into your savings first, before you pay for your monthly expenses, you will have more success with hitting your savings goals.

And I totally understand that you might have some fears about being able to cover all of your bills. No one wants to be behind or overdrawn from their checking account. But if you don’t at least try this, you will probably never get ahead.

The reason I say this is because I lived it, and I’ve experienced it in my relationships and with the people I help.

I’m no financial expert, but I have been able to start and run a successful business, save enough to retire early, and invest in the stock market and real estate with success.

And I would be nowhere unless I started my little automatic savings account of $100 a month back in my 20’s.

I have helped countless people get over their fears and just simply start with $100 a month. Years later they have amassed small fortunes, and it makes me happy to see that they feel more secure and have greater opportunities because they now have money to invest.

Side note: The best way to be successful as paying yourself first is to set up a totally separate account for your investments and make it difficult to withdraw from the account. You can manage your investments all in one place such as Personal Capital.

So what does it mean to pay yourself first?

Paying yourself first means you put money into savings automatically as soon as you get paid or receive income. Some people also “pay themselves first” by putting money towards their debts each month. This is a great plan if you have credit card or loan debts and you are paying interest.

This key is to automatically take money out of your paycheck before you even see it.

A common question people ask is whether they should pay themselves first even though they have debt or owe money. And after witnessing many people trust this process of paying themselves first, even though they are paying off debt, I can say the ones who have success are the ones who continue saving while making payments.

Watch this video we put together about paying yourself first. We also answer a very important question someone asked us about whether they should use savings to pay off their loan… You can subscribe to our channel to get more videos by clicking here.

How to Get Started Paying Yourself First

First set up a separate savings account at a bank and at a brokerage account with a company like Vanguard or Fidelity. Here’s a blog post that details setting up an investment account.

Then set up an automatic withdrawl from your paycheck account (checking account), to deposit into your bank savings account and brokerage account. I recommend sending half into your savings and half to your brokerage in the beginning.

Finally, set the amount at something you can afford or that challenges you a little, say $100 per month or $500 a month. You can always reset this amount.

Watch your accounts grow… this is a little like watching paint dry at first, but once your accounts grow over some time, you will be surprised at how quickly your savings adds up.

Once you get comfortable with a set amount, increase it

Once you learn how to cut from your budget and live more simply, you can save even more. This is why learning to budget is so important. With time, it can help you save more money. You can also find ways to make more money, through side hustles or businesses. I suggest increasing your savings amount as soon as you make more.

I know one couple who both work, and the husband’s pay gets used for bills (but even he pays his savings first), and then the wife’s pay is set aside completely for investments! They are saving 50% of their income per month! Not only have they amassed over a million dollars in savings before the age of 55, but they also own many rental properties. The best part is, they have paid off most of many of their properties and they are cash flowing on them now. Click here to read about how to buy a house to turn it into a rental.

Budget Printables Monthly Spending Plan Financial Goals Debt Credit Financial Freedom — Click here to get these free worksheets to help you get your finances in order!

Create a plan for paying yourself first that works for you and your family

Try to come up with some creative ways that you can save first and make it a priority! Talk to your family members and make a plan so you can all help each other meet your savings goals faster.

Here are a few tips to get you started with paying yourself first:

Track your spending and saving- get worksheets here
Look for automatic charges to your credit card that can be eliminated
Go set up an account today while you are thinking about it
Start a side hustle as a family
Stick to your plan, don’t touch the savings for ANY REASON, and consult the whole family in times of weakness

Here are more articles to help you cut spending and make a few extra dollars:

We hope you enjoyed this post on paying yourself first. If you are interested in learning more about budgeting, saving, investing and increasing your wealth, you may want to sign up for our budgeters email list by clicking here. We show you how we got our finances under control as a family, and we share our best tips for increasing your wealth faster.