How to Get Ahead Financially With This Powerful Strategy

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Use this powerful budgeting strategy to get ahead financially. Everything you need to know about how to make paying yourself first work on any budget.

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Does it feel like you’re living pay to pay?

Payday rolls around and there’s rent or mortgage to pay, bills to cover and groceries to buy. And you need to put petrol in the car.

Then kids come home and tell you of a school excursion that needs to be paid… like, tomorrow mum!

Saturday comes you need a new work shirt. The kids really need new shoes for Summer – their toes are hanging over the top of last season’s thongs.

And you’re still recovering from when the washing machine stopped working last month.

Before you know it, there’s no money left, and you’re hanging out for the next paycheque.

And your savings goals?

They get pushed aside to next payday.

Can you relate to this?

I know I can!

But there is a trick to saving money – even when the budget is super tight.

How to Get Ahead of the Bills – The Golden Rule of Budgeting

You have probably already heard this golden rule a dozen times.

You know it, it makes sense.

What’s this golden rule of budgeting? It is…


Before you pay the bills or the rent or the groceries or anything else, you put money towards your long-term savings.

Successful budgeting means spending what’s left over after you save rather than trying to save what’s left over after you spend.

But how do you pay yourself first when money is tight and covering day to day expenses is a juggling act?

That’s what we’ll cover in the rest of this article.

Why You Should Pay Yourself First

The key to building savings is to put aside money regularly and consistently.

Those two magic words are worth repeating: regular and consistent: saving consistent amounts of money at regular intervals (every pay).

But what happens when we spend first and save last? We save haphazardly at best. Or save nothing at worst.

It happens to all of us.

There’s $20 left in your wallet and you see that special something you just have to have.

Or maybe you’re just hungry and you swing by drive-thru on the way home from work.

Because $20 isn’t going to make much difference anyway, right? And there’s always next week.

Behavioural economics shows that we rarely think rationally when it comes to money. We spend emotionally and then scramble to rationalise our spending after the fact.

That’s where paying yourself first comes in.

The advantage of paying yourself first means rationalising your saving decisions before you get even get paid. That way, you eliminate the need for discipline.

You hack your habits to circumvent emotional spending.

(Or hungry spending. Or tired spending.)

When you pay yourself first, you can almost guarantee that you will reach your savings goals as long as you don’t dip into your savings.

And when you consistently deduct a regular savings amount from your pay, before you pay anything else, you won’t even notice it’s gone. Your spending will adjust accordingly, as long as you’re not making up the deficit with debt.

Your savings will not only help you reach your financial goals, but they will also act as an emergency fund and create a buffer against the unexpected.

How Much Should You Pay Yourself First?

The short answer is to pay yourself as much as you need to reach your goals.

The key to working out how much you need to save towards your goals is to reverse engineer them.

For example, if your goal is to save a house deposit, then working backwards you calculate the repayments you can afford, how much you can afford to borrow based on those repayments and then the deposit necessary to borrow that amount.

The next step is to divide the goal amount (in this case the deposit) by how many paydays until you hope to reach your goal. So if you hope to save $20,000 in 5 years, you need to save $147 each payday.

But what if money is super tight and saving ANY amount seems impossible?

There’s no denying that saving can be really, really hard when money is tight!!


It’s important not to wait until you’ve got more money to start saving. Because there will always be more expenses. More things to gobble up any pay rise you get.

Establishing a strong habit of saving now will mean you’ve got the foundations laid when your income does increase.

So if it’s only $2 each pay, start a savings habit today.

How to Create a Pay Yourself First Budget

Before you can create a budget, you need to create savings goals. What are you saving for?

Some long-term goals might be:

  • retirement savings (the good news is superannuation is a form of paying yourself first!)
  • an emergency fund
  • investment
  • savings to cover future bills
  • a house deposit
  • a car
  • education (yours or your children’s)
  • travel
  • house renovations, repairs or maintenance

Once you’ve decided on your goals and worked how much you need to save to reach those goals, the next step is to work out a budget.

I use a zero-based budget with a slight variation. Check out the article for more information on creating this simple budget, but to summerise here:

Income – savings – fixed expenses -less discretionary expenses = a small leftover buffer

There have been times in our life when all we could afford was $2 a fortnight towards our long-term goals. It took a long time to save for things. Sometimes it feels like ‘what’s the point, I’m not getting anywhere?!’.

But $2 each pay is always better than nothing at all. It adds up slowly. And you’ve established a strong habit for when times do pick up.

These Three Tips Will Ensure You Always Pay Yourself First and Get Ahead of the Bills

If you’re paying yourself first every payday, you’re already well ahead of the curve.

But there are three things you can do to ensure budget success:

  1. automate your savings
  2. know what your savings are for – aka don’t dip into your savings
  3. save for the bills

1. Automate Your Savings

The power of paying yourself is multiplied when it’s done automatically without you having to think about it.

The reason automation is so effective is twofold:

  1. you don’t miss money you don’t see
  2. you don’t need to rely on discipline to save.

I had a friend once who told me whenever she had savings they practically burned a hole in her pocket until she spent them. Those were her exact words, and I can totally relate. There are so many necessary short-term expenses to spend money on not to mention so much temptation to spend on unnecessary things as well.

When you automate a withdrawal from your transaction account to your savings account you don’t SEE that money and so it can’t burn a hole in your pocket, so to speak.

Not only do you not see (and therefore miss) the automatic deduction, you’re also not looking at your savings balance and finding ways to justify spending it on other things.

Which brings us to the next tip…

2. Rules for your Savings

When you’ve got immediate and pressing expenses, it’s hard not to dip into your savings.

Sometimes we soften the blow by promising ourselves we’ll make it up later. But we rarely do.

Unless it’s an emergency, do everything you can not to rob your savings for day-to-day expenses or go into debt.

If you’ve set very specific savings goals, coupled with not SEEING your balance and therefore being tempted, this becomes easier.

If you’re saving an emergency fund, it’s important to define what emergencies your fund is meant to cover. Write them down so there’s no confusion later on. Remember, we spend emotionally and rationalise our spending after the fact. Circumvent this process by having a proactive plan for your money that rationalises your spending BEFORE you feel emotional reasons to spend it.

3. Save For Your Bills

The best way to get ahead on your bills is to save a small amount towards them each payday.

I go into more detail on how to do that in this article: Make Bill Paying Easier With a Modern Envelope System but to summerise here, divide each expected bill by the number of pays until that bill is due.

So if your rego is due in six months and you get paid fortnightly, divide how much you expect the bill to be by 13 and put that amount aside each payday.

Do this for each bill and then when the bill arrives, you’ve already saved enough to cover it. YOU’RE AHEAD OF THE BILLS.

What if you can’t afford to save that much each pay?

Save what you can so that it is easier when the bills do arrive.

Again, the key to success is to automate this process so you don’t miss the money, you don’t see your savings and you’re not tempted to spend them. That way you don’t need to rely on discipline to save.

If having money in the bank for the bills doesn’t work for you, an alternative is to work out a payment arrangement with your utility companies so you can pay them each payday. That way you’re always ahead of the bills and you don’t have to worry about the temptation to spend.

Paying yourself is the most powerful budgeting strategy to get ahead financially. Even if it’s only a dollar or two per payday, you’re creating a solid habit to build on and making future expenses easier to pay.

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One Comment

  1. Yeah that’s real advice! But the very top of our check should go to Jesus who died for you! I hope you know Him! Tithing is commanded from God almighty! We owe Him our whole lives! Let me know what you think.