Budgeting 101--Pay Yourself First

You’ve probably heard the phrase “pay yourself first” before. Maybe you’ve heard it dozens of times. There is a reason for that-- It’s sound financial advice.

First, I will tell you why it’s one of the smartest money moves on Earth, then I will tell you how to do it and where to keep it.

Why pay yourself first?  Money is a means to an end. In other words, we use money to get what we really need and want. Things like, a place to live, food to eat, clothes to wear, electricity, transportation, entertainment, collectables, camping gear, LCD televisions, and on, and on the list goes. We will call these items “the bills”. 

We also need money for all sorts of emergencies. That’s why we need to put money aside for later use, when our checking accounts are running low but we still need money to handle an emergency.

How to pay yourself first? Unfortunately, most of us have to work for our money. Also, unfortunately, when we get our paycheck, a big chunk of it is already owed to somebody to pay for the wants and needs that we have already committed to (the bills). In some cases, all of our paycheck (and more) is already committed. That makes it impossible to pay yourself first, right?

Not necessarily. Not if you use a clever little tool called a “Budget”. A budget is basically a list you create that shows how you will spend your money. You can create it either on paper or on your computer and it should look something like this:

500.00 Rent
200.00 Food
100.00 Savings
100.00 Electric
80.00 Fuel
50.00 Cable TV
30.00 Phone
1060.00 Total

OK, that is just a very quick example of a budget. You can play around with this and put your own amounts into it. What I really wanted to show you with this example is the third line down, “100.00 Savings”. That is how your pay yourself first. You have put yourself into your budget. You have made YOU a “bill”. So when you pay your bills, you will also pay yourself. Clever, eh? ;-)

There are all sorts of tricks for saving money, but this is one of the best I know of. If you can’t pay yourself $100 every month, no problem. Make it $50 or $20 or $10. Just get started and keep adding to your savings. You will be amazed at how fast it grows, with no effort at all.

Where to keep your savings?  Well, that depends on many factors, including your own self-control. For instance, if you would be too tempted to spend $325 cash you have stashed in a fireproof box on the top shelf of your closet, then it should probably be in a savings account at a bank. I’m just saying.

However, if you believe that one day Obama will declare Martial Law and lock up everybody’s bank accounts for our own good, then maybe you should start shopping for a fireproof box or even a good fireproof safe. HINT: Gun safes have room inside for guns and money.

As I said, there are many factors involved in the decision of where to keep your savings, so take an honest look at yourself and your needs, then make the best decision for you.

Bottom line: Start paying yourself first, because it’s your money.

Peace out.
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Duane’s YouTube Channel


  1. You should open a financial firm! Great advice Duane!

  2. I've copied your list Duane and modified it to my outlays and income.
    According to my calculations I should have 213 pounds saved at the end of the month.
    If this actually happens I'll have you to thank for it, as I've never managed to save anything before.
    This could be the start of something great!
    Great post Duane :-)