What if saving money didn’t depend on how much you had left at the end of the month?
For many people, the traditional approach to managing money looks something like this: receive your income, pay the bills, spend on the things you need and want, and then save whatever is left.
The problem? There often isn’t much left.
This is where the “Pay Yourself First” approach can make a difference. Instead of treating savings as an afterthought, you make it one of your financial priorities from the moment you receive your income.
What Does “Pay Yourself First” Mean?
Paying yourself first simply means setting aside money for your future before spending on discretionary expenses.
Think of it as another monthly bill, but this bill is paid to your future self.
For example, if you receive $4,000 in monthly income, you could decide to automatically transfer $400 to your savings or investment account as soon as you get paid.
The remaining $3,600 is what you have available for your regular expenses and lifestyle.
The idea isn’t necessarily to save a specific percentage.
It’s about creating a system where you save and invest consistently and intentionally.
Why Does It Work?
One of the biggest challenges with saving is that it requires discipline every month.
If you wait until the end of the month to see what you can save, your spending will often adjust to your available money. In other words, the more you have available to spend, the more you may end up spending.
Paying yourself first reverses that process.
Instead of asking:
“How much can I save with what’s left?”
you start asking:
“How much can I set aside before I start spending?”
This small change in mindset can have a significant impact over time.
How to Put the Strategy Into Practice
1. Start with an amount you can
realistically maintain
There is no universal percentage that works for everyone.
Starting with $100 per month and gradually increasing it can be much more effective than setting an unrealistic target that you abandon after a few months.
2. Automate your savings
One of the easiest ways to pay yourself first is to automate the process.
You can set up an automatic transfer from your bank account to a savings or investment
account shortly after receiving your income.
Automation removes the need to make the decision every month.
3. Give your savings a purpose
Saving becomes easier when you know what you’re saving for.
Different goals may require different types of accounts and investment strategies, so it’s important to consider when you’ll need the money and what you’re saving it for.
4. Increase your contributions over time
Paying yourself first doesn’t have to remain the same forever.
As your income increases, consider increasing the amount you save or invest. This allows your lifestyle to grow while still making progress toward your future.
Saving Is Only the Beginning
Paying yourself first is not simply about putting money into a savings account.
Once you’ve established the habit, the next question becomes:
What should your money be doing for you?
Depending on your goals, your financial plan may include different types of savings and investment accounts, such as a TFSA, RRSP, FHSA, or RESP.
The right strategy will depend on factors such as your goals, time horizon, risk tolerance,
tax situation, and overall financial circumstances.
The objective isn’t simply to accumulate money, but to make sure your money is working
toward the things that matter to you!
Make Your Future Self a Priority
Your future financial security is built through the decisions you make today.
Paying yourself first is a simple principle, but it can be a powerful one: prioritize your future before your money gets spent elsewhere.
And if you’re not sure how much you should be saving, where you should be investing, or which accounts may be appropriate for your goals, that’s where a personalized financial plan can help.
