The concept of “paying yourself first” was, for me, the most powerful concept in the book “Rich Dad Poor Dad” by Robert Kiyosaki. It’s so powerful I’ve applied the principle to many non-financial areas of my life too, and seen huge benefits.

Unfortunately though, the way it’s presented in the book makes it come across as extreme, and many people just skip over it as a result. In fact, it’s one of the most simple and effective way of making important long-term changes in your life.

So I’ll try to rehabilitate the “pay yourself first” concept, then show how you can apply it to far more than just your personal finances.

The “pay yourself first” concept

The idea is simple: if you plan to save or invest whatever money you’ve got left over at the end of the month, there probably won’t be any.

By the time you’ve paid your bills and dealt with the day-to-day costs of living and treated yourself a bit, there will be months (perhaps many of them) when your bank balance teeters on the brink of £0 just as your wages are due to land. “I must try harder to save money next month so I’ll have something left over to invest”, you tell yourself. Then you don’t.

When you pay yourself first, you flip it: however much you want to invest, you automatically whip it straight out of your account at the beginning of the month – as soon as you get paid. All other expenses – your bills and your general living costs – will somehow need to be met by whatever is left.

The key point is you set this up to happen automatically: a standing order takes the pre-defined amount out of your account as soon as you get paid, and whisks it into an investment account or separate savings account – just like you’re paying any other bill.

People often reject this idea because it sounds daft at first: if there wasn’t enough left over to invest, surely by investing first there won’t be enough left over to pay your bills and you’ll get into trouble?

Up to a point, this is true: if there’s normally very little left over and you suddenly decide you’re going to invest 50% of what you earn right away, clearly your bills aren’t going to get paid. But if you approach it sensibly, there are two big advantages to paying yourself first.

Having less money makes you conserve it

If your rent or mortgage suddenly went up by £100 per month, you’d probably be able to find ways of cutting back to spend £100 less elsewhere. You might even do it automatically: many people unconsciously juggle spending choices so their bank balance nearly but not quite hits zero just before the next payday.

Automatically saving or investing £100 at the start of the month achieves exactly the same thing. You might be able to adjust dozens of other spending decisions to compensate without thinking about it, or you might need to deliberately sit down with a budget and work out where you can cut back. Either way, with the money already gone, you’ll make it work: it’s psychologically worlds away from saying “I’ll try really hard to end the month with £100 left”, even though it’s mathematically the same.

Related reading: The “no budget” budget

You mentally signal that investing is important to you

By paying everyone else first and investing what’s left, you’re making the statement that your investments are the least important expense. It’s a nice-to-have, if circumstances allow.

Paying yourself first flips this: by investing before you even pay for your essential living costs, you’re saying that your financial future is your top priority. If you’re routinely struggling near the end of the month as a result, something else has to change. You need to find ways to cut back or to earn more, but you’ll no more skip your investments than you’d skip paying your rent.

It’s one of those mind-hacks that shouldn’t work if you know you’re doing it, but still does. For me, this simple mental re-frame totally changed how I thought about investing: it’s automatic, it’s unavoidable, and everything else needs to fit around it.

Paying yourself first in other ways

That’s the original “pay yourself first” concept as applied to money by Robert Kiyosaki – but I found it so powerful, I ended up applying it to other areas of my life.

For the purposes of generalising beyond personal finance, you can define paying yourself first as:

  • An automatic rule
  • That contributes to your long-term goals
  • By making sure a helpful action “just happens” without needing luck or conscious thought

Let’s look at where else you can use this principle…

Personal projects

On multiple occasions I’ve tried to establish a habit of writing at least 500 words per day. Writing is something I enjoy, I’m reasonably good at it, and I know from experience that it’s vastly easier to write well on demand if the writing “muscle” is exercised daily.

Despite having good reasons for doing it, it never stuck for long: “do daily writing” appeared on my to-do list every day, but frequently got jostled out by other demands on my time.

It only changed when I added the requirement that it had to be done before any other type of work. Normally I have my words done before 7am, so I’ve ticked off the task before my son wakes up and all hell breaks loose. On the rare occasions when I don’t manage to do that, I still take a few minutes to finish them off before I get started on my other “work” tasks of the day.

By the end of the year, I’ll have written a few books’ worth of words (albeit most of them nowhere near ready to publish) – all because I decided to “pay myself first”.

This same concept is powerful if you have a day job and you want to start your own side-project as a possible means of escape. If you wait until the evening or until you get some free time at the weekend, you won’t. If it matters to you, you should do the work first and automatically – and everything else will have to somehow fit around it.


Every evening, I identify the 3-4 most important tasks I want get done the next day. I then make sure I get at least two of them done before I let anyone else add more tasks to my plate. Even though I’ll be checking what’s going on and replying to messages, any new tasks that result from them – like reviewing a document or having a non-urgent call to discuss something – have to wait until I’ve got two of my most important tasks done.

At first this doesn’t look much like paying myself first, but it meets the criteria: an automatic rule (“do the two most important things before anything else”) that makes it easy to achieve your long-term goals (I’ll do what’s long-term important for the business, not just short-term urgent today) by making sure the helpful action “just happens” (easy now the habit is established).

I find this rule to be effective because it’s simple and easy to stick to – unlike the rigid “no checking email before lunchtime”-type rules of many productivity addicts, which doesn’t work when you’re supporting a team and relies on continuous willpower.


My wife and I have a small set of “non-negotiables” that keep us sane despite having a toddler. We both get to do the regular exercise we enjoy. She gets Sunday mornings off while I take him out. I get to go for a coffee and read on my own every Friday before work. We go for lunch together once a week.

If we relied on doing these things when we got a chance, we rarely would – and we’d have to constantly negotiate about who’d done “their thing” most recently and whose turn it was now. Instead, we bake these activities into the structure of our week: for example, I can’t commit to lunch “every Wednesday” but we set a date for the coming week every Sunday when I know what my schedule looks like.

Again, these are automatic rules that allow us to achieve our long-term goal (of staying emotionally happy and healthy) without needing any conscious thought.

Where can you pay yourself first?

Just like Rich Dad Poor Dad’s conception of “pay yourself first” soon gets silly if you stick to it rigidly, its application in other areas needs flexibility too. It’d be madness not to transfer £100 back from your savings account if it’d avoid getting evicted for not paying your rent (or even getting hit with a £50 late fee), and similarly I’m not going to sit bashing out my 500 words while there’s a business emergency or my son screams the house down.

But financially and elsewhere, I’ve found paying myself first to be the simplest and least mentally demanding way of making sure I’m making consistent progress towards the goals that matter to me. What do you value enough to put first, and how can you do it? It’s a question your future self will thank you for asking.

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2 thoughts on “Pay yourself first

  1. Thanks for explaining this so simply. 20 odd years ago I did exactly what you said at the start and glossed over the concept because i didn’t really get what he was saying and thought it was something for rich people. So I’ve learnt something new and I love the idea of applying it to any area of life. I’ve also shared the article with my nephews (15 & 18yo) who are just starting to earn money, hopefully they will get into great habits early.

    1. Great stuff Helen! Being exposed to these types of ideas early is such a big advantage in life…if you can persuade them to listen of course 😀

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