Pay yourself first: what this strategy is and how to follow it

1 min readLast updated April 30, 2024by Lisa-Marie Voneshen

This article will take you through the “pay yourself first” strategy, how to use it and why it could prove useful, especially if you’re struggling to save.


  • Paying yourself first helps you prioritize your financial future by paying into a savings account, pension or investments before paying your bills. 

  • It can be useful for those who struggle to save, but you must prioritize clearing debt.  

  • You can automatically move money from your current account to your savings account. 

  • A financial advisor can examine your circumstances and help you meet long-term goals.  

What does it mean to pay yourself first? 

The pay yourself first strategy prioritizes saving money for specific financial goals, such as retirement or an emergency savings pot, and then paying your bills. 

Traditionally, you would have a budget focusing on paying your monthly bills before setting aside anything for your savings goals. This strategy turns that tradition on its head.  

When you adopt this strategy, it’s common to automatically send a set amount to contribute each month to a savings account, retirement or emergency fund so it never reaches your checking account. 

Paying yourself first can help curb your spending to help establish funds for the future, as you won’t have access to your money on payday.  

You can also be flexible with this strategy.  

You can vary the amount you choose to save in relation to your goals and consider changes in your circumstances, such as a pay rise or a temporary reduction in your salary.  

However, it’s worth stressing that if you have any debt, you should prioritize tackling it first instead of saving, as the interest rate can be notoriously high.  

What are the benefits of the pay yourself first strategy? 

According to the latest saving statistics from the Federal Reserve, we can infer the paying yourself first strategy isn’t being widely used. According to the Fed’s 2022 report, over 30% of US adults could not afford a $400 emergency using cash.  

The pay yourself first strategy helps combat this issue. By adopting this technique, you can steadily build up a nest egg to create a financial safety net when the unexpected happens, such as a medical emergency or an unexpected expense.  

Having enough money to cover an emergency is just one of the major benefits of the pay yourself first strategy; some other advantages include: 

  • Saving for the future: Saving for your future is always advantageous, whether it’s saving for a rainy day, for a big purchase, or planning your retirement. The pay yourself first strategy forces you to be strategic about your future, emphasizing saving for tomorrow as well as spending today.  

  • Growing your money: If you decide to use a savings account or put money in a retirement account, not only are you saving your money, but you’re also growing it. Take a savings account with an annual percentage yield (APY) of 4.35%, for example. If you deposit $1,000 and contribute $200 monthly, after one year, you will have just over $3,400. In 10 years, you will have over $31,000.   

  • Getting into good financial habits: Rather than savings becoming an afterthought, with whatever is left at the end of the month going into your savings pot, paying yourself first puts savings at the forefront. Prioritizing your savings is a good habit and a clever financial mentality to adopt. 

How can I adopt the pay yourself first strategy? 

If you want to pay yourself first, these tips can help. 

  • Review your debt: If you have high-interest debt, it’s worth clearing this as a priority, as it can build up quickly. So, ensure you make at least minimum payments each month. 

  • Establish a savings goal: Having a clear goal to work towards will help you commit to saving. Popular goals include building an emergency fund (worth three to six months of monthly spending) or retirement savings. You can also save for a wedding, a big holiday or urgent repairs. Some banks allow you to split funds over many savings pots. 

  • Determine how much you can afford to save: Once you’ve paid for groceries, household bills, insurance, transport, your rent/mortgage, and discretionary spending, you can find out how much you can afford to save. Even if it’s only a small amount, this can grow.  

  • Automate your savings: To avoid the temptation of spending, you can automatically move your money to a savings account. Some autosaving apps can even figure out how much you can afford to save and move it for you.  

  • Focus on retirement: You can contribute to a workplace retirement fund, such as a 401(k) or 403(b), which your employer also pays into. Some employers will boost the amount they contribute if you increase how much you pay each month.  

It’s also worth reviewing savings goals regularly and how much you contribute. 

For example, if you build an emergency fund with three months’ expenses, you might consider focusing on another goal. 

Alternatively, if you get promoted or receive a bonus, you may consider increasing your savings with a regular or one-off payment.  

Pay yourself first: what to consider 

Before paying yourself first, always prioritize your debts and bills, as missing payments can impact your credit score and your ability to borrow in the future.  

You should also make sure you get the right savings account for your needs and shop around for the best interest rate, so you get the most out of your money.  

Once your savings start to grow, resist the temptation to spend it.  

If you prefer instant access to your money, an easy-access account is worth considering, although regular savings accounts can offer the best rates if you contribute monthly.  

Considering investing? You should do your research to ensure that your investment strategy matches your risk appetite and goals.  

Get expert financial advice 

Saving for the future can be daunting, but it doesn’t have to be. 

Paying yourself first could help you steadily grow a savings fund while also paying off your debts and day-to-day expenses.  

Building a financial plan with the help of a professional is one of the best ways to meet your goals.  

Unbiased can quickly connect you to an SEC-regulated financial advisor who can support you with your goals, whether you’re starting your investment journey or planning for retirement.  

Find your match here.  

Senior Content Writer

Lisa-Marie Voneshen

Lisa-Marie Voneshen is a Senior Content Writer at Unbiased. She is an award-winning journalist with nearly a decade of experience writing and editing content across various areas, including personal finance and investing.