“Pay yourself first” is a budgeting technique that emphasizes saving over spending.
Instead of starting with paying bills, taking care of needs, moving onto discretionary spending, then trying to hold onto the leftovers each time you get paid, this technique starts with placing a certain amount of money into savings before dealing with other obligations.
In a way, you’re just treating your savings as another bill—your most important bill, that you pay first every time. The payee is your future self, who will be grateful that you got into the habit now. Be consistent!
Where you place these funds depends on your own situation and personal goals. For example, you might build an emergency fund, put money aside for a goal such as a car or a down payment on a house, or move money into a retirement fund such as a 401k.
It’s important to start small, with an amount you can comfortably manage to put aside. It is far better over the long run to start with a small amount and build a habit over time, than to try to save too aggressively, fall short on funds for your expenses, and end up dipping into your savings right away and deciding it doesn’t work. Start small and increase the amount as circumstances allow.
