Pay Yourself First
Treat investing like a bill that has to be paid every month.
What This Means
Building wealth isn’t about making one great investment. More often than not, it’s about consistently setting money aside over a long period of time.
Many people invest whatever is left over after paying their bills and spending money on everything else. The problem is, there’s usually not much left. We can always find another reason to spend money today.
Paying yourself first simply means investing before you spend money on anything else.
A better approach is to pay yourself first. Treat investing like any other monthly bill by setting aside a certain dollar amount or percentage of your income before spending it elsewhere. If possible, make it automatic so you don’t have to think about it every month.
The amount you start with isn’t the most important part. In the beginning, building the habit is far more valuable than investing a large amount. Once investing becomes part of your routine, you’ll often find it easier to increase your contributions over time.
Building wealth rarely comes from investing what’s left over. It comes from making investing a priority and staying disciplined year after year.
Common Questions
How do I know how much to invest each month?
There isn’t one number that’s right for everyone. Start with an amount you know you can stick with. Consistency is far more important than trying to invest a large amount for a few months and then stopping. As your financial situation improves, increase your contributions whenever you can.
What if I save up on the side and invest once I have a larger amount?
I’d rather build the habit of investing consistently than wait until I’ve saved a larger amount. We never know exactly when the market is going to make its next move, so having your money working for you is usually better than having it sit on the sidelines. Consistently investing over time also allows you to benefit from dollar cost averaging.
What if I have debt?
It depends on the type of debt and the interest rate. High-interest debt should generally be a priority. That said, we don’t believe investing always has to wait until every dollar of debt is paid off. In many situations, paying down debt while consistently investing allows you to make progress on both goals at the same time.
Remember This:
Invest first. Spend what’s left.