Firevalt Blog - Personal finance and entrepreneurship

Pay Yourself First

February 13th, 2006

One of the principles that seems to be common across many personal finance books is to “pay yourself first”. That is, you should set aside a specific percentage of your income for saving, investing, or debt reduction. It should be a constant percentage that you stick to each month. For example, if you decide to set aside 10% each month to “pay yourself first”, — whether to savings, investment, or debt reduction — you have to simply learn to live off of the other 90%. Contrast that with the attitude “I’ll save whatever is left at the end of the month.” Nothing is ever left at the end of the month!

If you don’t make paying yourself a priority, it won’t happen. (By the way, buying yourself a new pair of jeans or taking a trip is not paying yourself.) If you *do* make paying yourself a priority, you’ll learn to live on less and the income you set aside can work in your favor.

If paying yourself first is such an important principle, why shouldn’t your personal finance program encourage you to do it?

Entry Filed under: Debt Reduction, Firevalt, Frugality, Investing, Saving