Money-Saving Tips: Pay Yourself First

Finance columnist Deanne Gage discusses her best tip for saving more money each month

Photography by 401(K) 2012, via Flickr (CC)

This past month, I’ve suggested small ways we can all save more money. All of these ideas, however, lead back to my number one savings tip—paying yourself first.

I first learned about this concept first more than 20 years ago when I read David Chilton’s The Wealthy Barber. I was a high school senior when my father gave me his copy to read. The only reason I read it? I knew my dad would quiz me on the material.

You see, I grew up in the sort of household where any declaration of boredom on my part meant poring over the stock pages or calculating complex income tax returns. But I digress.

Paying yourself first, in Wealthy Barber speak, means saving 10 percent of your income and investing it. The thought is you won’t miss the deduction if that amount automatically comes off your paycheque, and if you’re consistent at doing this for all your working years, you’ll find yourself with a sizeable nest egg for your future. It’s a philosophy that’s stayed with me for all these years even through humble-paying jobs.

But I must confess, paying yourself first sure ain’t easy when kids come along. Between a mortgage, daycare (a.k.a. “second mortgage” in some circles!), car maintenance, insurance, groceries, kids’ activities and education savings plans, it’s easy to put your own financial future on the back burner.

So I had to get creative. That meant using a combination of saving ideas, some of which I outlined this month. But it also meant doing something else—something that is a bit different than the old adage of “spending less than you make.” I’ll explain what I mean in my next post—stay tuned!

Did you try any of the weekly savings tips this month? How did it go?

Deanne Gage has written about all matters financial since 1999. She writes, edits and strategizes out of her Toronto home that’s partially under construction. Besides money issues, she enjoys running fast, jazz music and drinking a quality glass of Merlot. Her two-year-old daughter is quite familiar with money: she borrows it from mom’s wallet for her toy cash register.

One response to “Money-Saving Tips: Pay Yourself First”

  1. The 10% amount seems small these days so we try to save at least 30%. Each year, we try as a family to increase it more and more (and decrease items from our budget). It is actually a fun exercise.