This is one of those things that you’ve probably heard many times before and you know you should do it, but most likely you don’t. So let’s look at what is meant by paying yourself first, and how it will help you save.
To pay yourself first really means that once you have set up a monthly budget and worked out how much you can save each month, then you should transfer that amount into a savings pocket immediately after being paid. If your bank allows, you can set up a recurring payment to transfer the money each month.
We’re used to setting up payments for accounts and debt repayments, but we seldom take our savings “payment” seriously. You should think of this as another account that you have to pay.
The advantage of transferring the savings amount out to a Savings Pocket immediately is that you cannot be tempted to spend it. You can’t spend what you don’t have (well you can with a credit card but that is a discipline you need to solve for yourself)
Work out how much you can save (either actual savings or extra payments towards debt) and set up an automatic payment now to transfer this money. If you’re not sure how to create a budget, read this blog.