Here’s how most people handle money:

Salary comes in → bills get paid → rent, groceries, EMIs, entertainment, shopping…

and then, whatever is left (if anything) goes into savings.

Sounds familiar, right?

But here’s the catch. if you only save what’s left, chances are there won’t be much left at all. Life always finds a way to throw in extra expenses—an outing, a repair, or some last-minute need, that eats up the “savings” part.

That’s why the experts recommend the following money principle: “Pay Yourself First.”

Savings are the foundation for everything; for emergencies, for big purchases, for investments, retirement, or even for your dream home. Without savings, goals remain just dreams.

It is an easy concept with a big idea behind it.

As soon as you receive your salary or paycheck, set aside a specified dollar amount for saving or investing before you spend the rest of your money on anything else.

Look at it in this way:

You work hard today for your future. Why not let your future self be the very first to get paid? Right?

Let’s take an Example: Assume, Your Monthly salary is ₹30,000 and your Savings goal is 20% = ₹6,000. As soon as your salary lands, place ₹6,000 in a savings or investment account.... and now you have ₹24,000 to live on this month.

Notice how this completely shifts the perspective. You are not saving what is left; you are using what is left after saving!

Savings Explained: The Principle of

“Pay Yourself First”

What Does “Pay Yourself First” Mean?

If you save, you teach yourself that savings are a required expense just like your rent or EMIs. Treat your savings like a fixed bill just like rent or EMIs. This habit trains you to save no matter what.

Take one tiny action – set up an auto-debit, for even ₹1000, from your salary account to a fixed deposit or mutual fund SIP.

A year goes by and you do not even notice, but you have developed a habit of saving!

Quick tip for Financiography readers:

Why Is “Paying Yourself First” Important?

1. Builds Financial Discipline

2. Becomes the Foundation of Your Future

4. Provides Peace of Mind

As your salary grows, so do temptations—fancy restaurants, gadgets, impulsive buys. Paying yourself first ensures your savings grow with your income too.

There is no hard and fast rule - it all depends on your lifestyle, your obligations, and your goals in life. But, a common way of looking at savings is the 50-30-20 Rule:

50% → Needs (rent, bills, groceries, EMIs)

30% → Wants (movies, dining, travel, shopping)

20% → Savings & Investments

If saving 20% of your income sounds like an impossible task right now, do not let that stop you. Start with what you can afford. Even 5% or 10% will have an impact. What is important is creating a habit.

To put this into perspective: If one saves ₹2,000 each month for 10 years (with an expected return of 8%), then the savings after 10 years will exceed ₹3.5 Lacs!

That’s why It’s always better to save small amounts regularly than to save a large amount once every 5-10 years, or worse, not to save at all.

Final Thought:

3. Prevents Lifestyle Inflation

There is nothing more comforting than knowing you saved for the month already. Even if surprise expenses pop up, your future remains secure.

How Much Should You Save to "Pay Yourself First"?

Some Practical Ways to “Pay Yourself First”

1. Automate Your Savings

For example: Set up an automatic transfer to a savings/investment account from your salary account every payday. This way, you’ll be saving before you spend and never have to think about it!

2. Use Separate Accounts for Daily Expenses and Savings

By using separate daily expense account and a savings account, you keep your savings accounts out of sight. Out of sight ultimately means less temptation.

3. Start Off Small and Build Up Slowly

If you can’t save much, just start off at ₹500 –₹1000. Every time you get a pay increase, also increase your savings percentage.

4. Work on Long-Term Goals

First things first, begin saving for an emergency fund-enough to cover at least 3-6 months of expenses. Alongside the emergency fund, you should also start saving for retirement.

Honestly, the sooner (ideally starting in your 20s) you start saving for retirement is the best.

Secondly, once you have enough saved in an emergency fund and retirement savings, you can prioritize your long-term goals- like saving for a house or car, saving for vacations or travel, or saving for your children’s education.

Then you can Reward Yourself After Saving.

Remember that saving does not mean sacrificing Therefore, once you have saved money for your future do not feel guilty about spending it freely and on your wants.

“Pay yourself first” does not mean you will stop living life or cut out all fun, but quite the opposite, really. Most people spend first and save what is left over (which usually is nothing).

So, stop that! Pay yourself first so you can enjoy the rest guilt free, rather than hoping to enjoy what is left over. It will be like planting seeds today, so you can sit in the shade tomorrow.

Pause for a moment before moving money to your cards, or paying your bills.

Take a moment and think about you and your spending, and pay yourself first.

It only takes this simple adjustment to make meaningful difference in your wealth potential. When paying, your future self must be paid first.