Pay Yourself First: Ultimate Financial Game-Changer

LAST UPDATED: July 12, 2023 | By Conrad Golly
Pay Yourself First

You work hard, you earn those crisp dollar bills, and what’s the first thing you do? Treat yourself to a fancy latte, swipe your credit card for that new gadget, or maybe indulge in a little retail therapy.

Sound familiar? Don’t worry, we’ve all been there. But what if I told you there’s a better way to handle your hard-earned cash?  Pay yourself first.

It’s a nifty little strategy that flips the script on your financial habits. Instead of splurging on immediate gratification, you’ll learn how to prioritize your own financial well-being from the get-go. And trust me, it’s a game-changer.

What does it mean by pay yourself first?

Pay Yourself First
Pay Yourself First

Pay yourself first method is a golden rule in the world of personal finance, and let me break it down for you in our friendly, fun-filled conversation.

Now, I know what you’re thinking. “Why should I bother with this paying myself first stuff?”

Well, my friend, here’s the scoop: By mastering this strategy, you’ll gain the power to build up your savings, create a safety net for emergencies, and even pave the way for your future dreams and goals. We’re talking about financial freedom here!

But hold onto your wallets, because there’s more. In this article, I’ll spill the beans on the step-by-step process of paying yourself first. We’ll explore practical tips, nifty tricks, and oh-so-clever strategies to make it work for you.

So, get ready to say goodbye to financial stress and hello to financial success! By the time you reach the end of this article, you’ll be armed with the knowledge and tools to rock the world of personal finance like a pro.

Get ready to pay yourself first and watch your bank account dance with joy. Let’s dive in and make that money magic happen!

Here’s the deal: When we talk about paying yourself first, we’re talking about treating yourself like the superstar you are and making sure you get your fair share of the financial pie right off the bat.

It means giving yourself top priority when it comes to your hard-earned moolah.

So, instead of letting your money slip through your fingers like a slippery eel, you flip the script and put yourself front and center. It’s like giving yourself a backstage pass to financial success!

But how does it work? Well, when payday rolls around, the first thing you do is allocate a portion of your earnings to yourself.

Think of it as a little love letter to your future self. Whether it’s stashing it away in a savings account, investing in your dreams, or building an emergency fund, you’re putting yourself in the financial driver’s seat.

Now, I can already hear you asking, “But what about all those bills, debts, and expenses?”

Don’t you worry, my savvy friend, we’ll get to that too! By paying yourself first, you’re not neglecting your responsibilities.

Instead, you’re setting yourself up for success by ensuring that your future dreams and financial well-being don’t take a backseat to the daily grind.

 Which is an example of pay yourself first?

Imagine this: You’ve just received your monthly paycheck, and you’re feeling all sorts of excited. Instead of rushing off to splurge on those shiny new shoes or the latest tech gadget, you take a deep breath and remember your commitment to pay yourself first.

So, what do you do? You set aside a specific percentage or a fixed amount of your paycheck right away, before anything else. It’s like your financial superhero signal to save and invest!

Let’s say you decide to allocate 10% of your earnings to pay yourself first budget. If your paycheck is $1,500, you immediately stash away $150 into -separate savings account or checking account or retirement account. Boom! You just paid yourself first.

Now, the remaining $1,350 is what you’ll use to cover your bills, expenses, and other financial obligations for the month. But here’s the cool part: You’ve already taken care of yourself and your financial future right from the get-go.

By making paying yourself first a priority, you ensure that your savings and future aspirations are on track, and you’re not relying solely on what’s left over after everything else. It’s like giving yourself a VIP pass to financial freedom and security.

 What does Robert Kiyosaki mean by pay yourself first?

Robert Kiyosaki, renowned author and financial guru, popularized the concept of “pay yourself first” in his best-selling book, “Rich Dad Poor Dad.”

According to Kiyosaki, paying yourself first means prioritizing saving and investing before spending your income on other expenses.

 In Kiyosaki’s philosophy, paying yourself first involves taking a portion of your earnings and directing it towards building your assets, such as investments, real estate, or business ventures.

By doing so, you shift your focus from simply working for money to making money work for you.

 Kiyosaki emphasizes the importance of developing a mindset that prioritizes building wealth and financial independence.

By paying yourself first, you establish a habit of saving and investing early on, allowing your money to grow and generate passive income over time. This approach aims to break the cycle of living paycheck to paycheck and create a path towards financial freedom.

So, imagine you’ve got your paycheck in hand. Instead of immediately blowing it on designer shoes or that fancy-schmancy avocado toast, you set aside a chunk for yourself.

This money goes straight into your savings or investment accounts, ready to grow and multiply.

But why, you ask? Well, Kiyosaki believes that by paying yourself first, you create a financial safety net and build wealth over time. It’s like giving your money a gym membership to pump some financial iron and make those dollar bills work for you.

 What is the 50-30-20 rule?

 The 50-30-20 rule is like the financial equivalent of finding a treasure map that leads to financial balance and harmony. Let me break it down for you in a fun and witty way!

 Imagine you’re a financial wizard, juggling your income like a pro. The 50-30-20 rule is your secret spell to allocate your money wisely.

 Here’s how it works: You take your monthly income (let’s say it’s $3,000 just to keep things interesting) and divide it into three magical categories.

 First, we’ve got the 50% party! This chunk, which amounts to $1,500 in our example, goes straight into your needs. Think of it as the responsible part of your financial journey.

It covers essential expenses like rent, utilities, groceries, and other must-haves that keep you thriving.

 Now, onto the 30% extravaganza! This slice of the financial pie, which adds up to $900, is all about your wants. Treat yourself!

Use this portion to enjoy the finer things in life, like that swanky dinner, a weekend getaway, or perhaps that fancy new gadget you’ve been eyeing. It’s all about bringing joy to your life without going overboard.

 Last but not least, we have the 20% savings superhero! This $600 portion is your secret weapon for financial success. It’s time to pay yourself first, my friend. Direct this money towards savings contributions, investments, and debt repayment.

Build up that emergency fund, invest in your future, or knock out those pesky debts. This slice of the pie is all about setting yourself up for long-term financial stability and growth.

The beauty of the 50-30-20 rule is that it helps you save money and maintain balance.

You’re not neglecting your needs, splurging recklessly, or ignoring your future financial well-being.

It’s like a finely tuned symphony where your income dances harmoniously between necessities, desires, and saving like a boss.

 What is the major benefit of pay yourself first?

 Financial Security and Freedom

When you prioritize paying yourself first, you’re building a solid foundation for your financial future.

By setting aside a portion of your income for savings and investments, you create a safety net that catches you when unexpected expenses or emergencies come knocking at your door.

 Emergency funds

Imagine having an emergency fund ready to save the day when your car needs repairs, your beloved pet has an unexpected vet visit, or that notorious “rainy day” arrives.

You won’t be caught off guard or stressed out, because you’ve proactively prepared for these situations.

 Financial Freedom

But that’s not all! Paying yourself first also sets you on the path to financial freedom. As you consistently save and invest, your money starts working for you.

It’s like having a little army of dollar bills marching towards your dreams and goals.

Over time, your savings grow, and you can take advantage of investment opportunities that can generate passive income.

Maybe you dream of starting your own business, traveling the world, or retiring comfortably on a tropical island. Paying yourself first gets you closer to turning those dreams into reality.

 Sense of Control

 When you prioritize your own financial well-being, you gain a sense of control and empowerment over your money.

You’re no longer a slave to each paycheck, living paycheck to paycheck. Instead, you become the boss of your financial journey, making intentional choices that align with your goals and values.

 Pay Yourself First- In a nutshell

Remember, paying yourself first is not just a catchy phrase; it’s a transformative mindset and a powerful financial strategy.

By prioritizing your own financial well-being, you’re taking control of your destiny, building a safety net, and setting the stage for long-term financial success.

 Through the concept of paying yourself first, you’re giving yourself permission to dream big, to invest in your future, and to enjoy the present with a sense of balance.

You’re breaking free from the cycle of living paycheck to paycheck and setting yourself up for a life of financial security and freedom.

Before you go…

Conrad Golly

Conrad Golly

I’m Conrad, a retired first responder turned successful Tyapreneur with a passion for real estate, family, and business acquisitions. With a focus on growing online ventures, I bring a wealth of experience to the world of entrepreneurship. I write on investing, personal finance, family life, and business strategies, inspiring others to achieve their goals.