Saving & Budgeting

What it means to “pay yourself first”

Prioritize yourself and your financial future

Key takeaways:

  1. Prioritize your financial future with a ‘pay yourself first’ budgeting strategy that sets money aside for savings before you pay for anything else.
  2. How much you set aside depends on your budget and your goals; the key is to just start.
  3. We make it easy by offering different ways to save and options to automate the process.


Many of us pay our bills and then put what’s left over at the end of the month towards savings. But what would happen if you did the opposite?

What if you made saving for your future self a priority instead?


What does it mean to pay yourself first? 

‘Pay yourself first’ is a reverse budgeting strategy where you first set aside money for savings, such as for retirement or an emergency savings fund, and then you pay for your ‘needs-based’ living expenses like rent or mortgage, groceries, and utilities. Whatever’s left over can then be used for non-essential ‘wants’ like dining out, streaming services, and others.

In some ways, this approach flips the script in terms of how you spend your money by prioritizing yourself and your savings goals. And once you’ve got it set up, you’ll get used to spending what’s left each month after you’ve already paid yourself.


How much should I pay myself first?

This really depends on both your budget and your goals.

One approach is to use a 50/30/20 approach, where you set aside 20% of your monthly take-home income for savings and paying off debt, 50% for your needs like housing or childcare, and the remaining 30% for wants. For example, if you take home $3,000 each month, this means you contribute $600 to saving and debt payoff, $1,500 for things you need to pay for each month (like groceries, housing, insurance, and utilities). This leaves $900 for the things you don’t absolutely need, like travel or dining out. If you need to modify the percentages a bit, you can—just be sure to make savings a priority.

Another approach is to put together a budget that includes a certain amount of money for savings. If you want to save for a specific goal, like the down payment on a house, use our Savings Goal Calculator to help you determine how much you’ll need to save each month. Then figure your absolute expenses (your needs). Whatever is left over can be used for your wants.

Be purposeful but realistic in how much you set aside; this approach isn’t effective if you end up racking up debt to make ends meet each month. Start with a solid understanding of how you spend your money and be honest with yourself in terms of putting your expenses into the ‘need’ versus ‘want’ category.

It gets tricky if you have credit card balances or other debt. The decision on whether to save or pay down debt is complicated, but you may want to consider having a portion of your ‘pay yourself first’ go directly towards paying down your debt while you also set aside money for something like an emergency savings fund.


How to pay yourself first 

The key to success? Choose the right type of savings account and then automate your savings, so that you really do pay yourself first before you pay for anything else.

First, choose the right savings account

You’ll want an account that earns dividends. For example, Global Credit Union savings accounts earn dividends on balances of $50 or more; the dividends automatically increase as your account balance grows. Members can even set up their savings to have up to 10 ‘buckets’ per account, which allows you to put your money towards specific goals. Global Credit Union also offers other ways to save , including money market or certificate accounts.

Next, automate your savings

There are two ways to do this:

1. Automatically distribute a portion of your paycheck to savings

You can ask your employer to divide your paycheck, or some financial institutions let you split your distribution among savings and checking options if you have direct deposit.

If you have your paycheck direct deposited to Global Credit Union, you can automatically split your paycheck for deposit into multiple accounts by setting up a direct deposit distribution. Just sign into online banking, click on the ‘Account Profile’ tab and select ‘Edit’ next to the direct deposit you’d like to distribute. Choose the amount you’d like deposited into each account and the account IDs, then start saving.

2. Automatically transfer a portion of your paycheck to savings 

Once your paycheck is deposited, you can automatically transfer a portion of it to your savings through what’s called a recurring transfer.

Use the Global Credit Union app or sign into online banking and select ‘Transfer and Pay.’ Choose how much you want transferred into your savings and how often, then let automation take over. The process is easy and free and can be changed at any time.


What’s the benefit of a pay yourself first strategy? 

When you pay yourself first, you set yourself up for financial success by prioritizing your future and make saving automatic. It’s easy, and a great way to remove the temptation to spend everything you make. Not sure? It’s okay to start small—the most important thing is to start. Because once you do, you can grow your savings from there.

Reward yourself first, and you’ll reward yourself for the future.


Put yourself first, pay yourself first

Start prioritizing your future today—automate your savings. Not an Global Credit Union member? Not a problem! Find out how to become a member.

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