Pay Yourself First: A Smart Saving Strategy (2024)

It may seem unrealistic to talk about paying yourself first when you’re faced with so many other financial obligations. Yet, while it’s critical to pay all your bills on time, saving for your future can’t always take the back seat. When you pay yourself first, you pay yourself (usually via automatic savings) before you do any other spending. In other words, you are prioritizing your long-term financial health.

If you make a habit of depositing or moving money into your savings account every time you are paid, you may be less likely to spend it on your everyday expenses. This practice can help you foster a habit of saving that will add up over time and help you be prepared for large or unexpected expenses.

If you're having trouble finding ways to pay yourself first, try taking these steps to get into the habit:

Figure out how much you can afford to save.

  • Review your budget.

    If you take a close look at your expenses, you may find that even small changes in spending habits, such as turning off unused subscriptions or revisiting discretionary expenses, could create big savings over time.
  • Utilize available tools.

    Wells Fargo customers can utilize tools like My Savings Plan® to set up a plan and keep track of progress.

Set a personal payment goal.

  • Determine how much of your monthly salary you need to set aside to meet your financial goals.

    Saving for retirement and building an emergency fund should take priority over savings for a vacation. A good target is to put 5 – 10% of your take-home pay toward your savings goals. Saving even $25 or $50 a month is one small step you can take to help you get into the habit of paying yourself first.

    If you know you can only pay yourself a small amount right now, look for opportunities to increase these payments in the future.

  • Find ways to make changes that impact your expenses in the long-term.

    If you decide, for example, that you can manage without one of your streaming services, update or cancel your plan and put the difference toward your savings goals.

Create a savings strategy.

Once you’ve found the money you need to pay yourself first, it’s important to find a smart way to save those funds until they’re needed. You can start by moving money into a savings account regularly with each paycheck.

  • Ask your employer to split your direct deposit

    so that an amount or a percentage goes directly into your savings account before you can spend it.
  • Another savings strategy is to set up an automatic transfer for each payday,

    regularly sending money from your checking account to your savings account. This can help you get used to managing living expenses with what looks like a smaller paycheck, when actually you’re building up your own savings.
  • How to set up automatic transfers.

    If you’re a Wells Fargo customer, it’s easy to transfer money into your savings when you have a checking account. Simply sign on to your account, and look for the Transfer and Pay tab to get started. You can set up, modify, and cancel transfers as needed. The most important part is to stay consistent and to treat the money you’ve saved as if it’s off-limits, except for its intended purpose or a true financial emergency.
  • Establish a dedicated savings account.

    If you don’t already bank with us, check out a Way2Save Savings account as a way to start the habit of saving automatically.


If you expect to receive additional money like a tax refund or bonus, make a commitment to yourself to set aside a portion of those funds and boost your savings.

You may not immediately see the benefit of paying yourself first, but don't get discouraged. If a financial emergency arises, this strategy can help you weather the storm. Ultimately, paying yourself first is about putting yourself first, which helps make sure you’re prepared for whatever’s yet to come.

Empower yourself with financial knowledge

We’re committed to helping with your financial success. Here you’ll find a wide range of helpful information, interactive tools, practical strategies, and more — all designed to help you increase your financial literacy and reach your financial goals.

Financial Education and Tools

Products and Services to Consider

  • Checking Accounts
  • My Money Map
  • Wells Fargo Online®

Requires a Wells Fargo savings account.

Terms and conditions apply. Setup is required for transfers to other U.S. financial institutions, and verification may take 1–3 business days. Customers should refer to their other U.S. financial institutions for information about any potential fees charged by those institutions. Mobile carrier’s message and data rates may apply. See Wells Fargo’s Online Access Agreement for more information.

Wells Fargo Bank, N.A. Member FDIC.



Pay Yourself First: A Smart Saving Strategy (2024)


Pay Yourself First: A Smart Saving Strategy? ›

By paying yourself before others, you are building the habits and discipline it takes to gain peace of mind with an emergency fund, save for large purchases and trips, and invest for long-term wealth building.

Is paying yourself first a good way to build savings? ›

If you make a habit of depositing or moving money into your savings account every time you are paid, you may be less likely to spend it on your everyday expenses. This practice can help you foster a habit of saving that will add up over time and help you be prepared for large or unexpected expenses.

What is the pay yourself first strategy of financial planning? ›

What is a 'pay yourself first' budget? The "pay yourself first" method has you put a portion of your paycheck into your savings, retirement, emergency or other goal-based savings accounts before you do anything else with it. After a month or two, you likely won't even notice this sum is "gone" from your budget.

How do you follow the pay yourself first savings strategy? ›

Pay Yourself First in Action

Here is how it works: Set up automatic transfers from your checking account to your savings account every month, ideally just a day or two after you normally get your paycheck. This is the paying yourself step. Pay your rent, credit cards, and any other bills for the month.

What is the pay yourself first savings strategy personal finance lab? ›

Pay Yourself First means that you are making your savings goals your #1 priority. This strategy has consistently proven to be the most effective way to achieve your long-term goals. A pay-yourself-first strategy means that before you pay any bills or address any of your expenses, you set aside money for your savings.

What are the disadvantages of pay yourself first? ›

Cons. Potential downsides to paying yourself first include: Transferring too much to savings: Not keeping enough money in your checking account can be harmful for your finances. Always keep a cushion in your checking account to avoid paying overdraft fees and possibly monthly service fees.

What are the cons of pay yourself first budget? ›

Easy to automateMay not work if you have too much high-interest debt
Trains you to live within your meansRisk of overdraft if you put too much in your savings account and not enough toward everyday expenses or your emergency fund
1 more row
5 days ago

What is the 50 30 20 rule? ›

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

What percentage should you pay yourself first? ›

This method allocates 20% of your monthly income to savings and debt repayment, 50% to necessities and 30% to wants. With a $3,400 monthly income, for example, you'd reserve no more than $680 for savings and debt repayment, $1,700 for needs and $1,020 for wants.

What are two reasons that pay yourself first works so well? ›

The advantage of "paying yourself first" out of your paycheck is that you build up a nest egg to secure your future, and create a cushion for financial emergencies such as your car breaking down or unexpected medical expenses. Without savings, many people report experiencing a large amount of stress.

What strategy is most effective for saving money? ›

10 Best Ways to Save Money
  1. Eliminate Your Debt. If you're trying to save money through budgeting but still carrying a large debt burden, start with your debt. ...
  2. Set Savings Goals. ...
  3. Pay Yourself First. ...
  4. Stop Smoking. ...
  5. Take a Staycation. ...
  6. Spend to Save. ...
  7. Utility Savings. ...
  8. Pack Your Lunch.

What does the 60/20/10-10 rule represent? ›

Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings. Once you've been able to pay down your debt, consider revising your budget to put that extra 10% towards savings.

What is paying yourself first an example of? ›

Often described as "reverse budgeting," paying yourself first ensures that saving is not only accounted for early and reliably, but that it becomes a priority. Your savings turn into a monthly expense — paid to you, by you — that you "owe" every month or every paycheck.

What is the 1 3 rule in personal finance? ›

The rule is that a third of your take-home income should be used towards your home, a third for living expenses, and the last third should be for savings and investments.

What are the advantages of paying yourself first? ›

Paying Yourself Pays Off

Saving toward retirement and building up a substantial emergency fund improves your long-term financial health; saving up for major expenses can help make big financial goals like homeownership or college possible.

How can I save my first $100000 fast? ›

Five tips to help you save $100,000 faster
  1. Live below your means and cut frivolous spending. ...
  2. Be hyper-aware of every monthly expense and ruthlessly cut back to save faster. ...
  3. Pay down high-interest debts like credit cards first. ...
  4. Find the financial institution that will get you the highest interest rate.
Mar 27, 2024

Is it better to pay off debt or build savings first? ›

Consumers can and should do both.” Even if you're working on paying down debt, building a healthy savings fund can help you avoid adding to that debt. Having an emergency fund reduces the financial burden when the unexpected happens, even if you start with a small amount and save slowly.

What are the pros of pay yourself first budget? ›

Pros and Cons of the Pay Yourself First Budget

The advantages of this budgeting system include: Reaching your long-term goals faster. Focusing on savings above everything else. Forcing you to consider your expenses carefully.


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