Pay-Yourself-First Budget

What Is a Pay-Yourself-First Budget?

Think of all the categories you would add to a budget. There’s “Housing.” So, if you rent, you’ll have to send a rental payment to your landlord at the beginning of the month. If you’re lucky enough to own a house, you’ll have to send your mortgage payments to the bank. There’s “Utilities,” which includes bills for electricity, gas, internet, cable and phone services. There’s “Food,” which covers needs like groceries and takeout. And, of course, there are non-essentials like gym memberships, hobby subscriptions and streaming services.

It’s likely that you’ve forgotten one very important budgeting category: yourself. This category should be your top priority. Find out how a pay-yourself-first budget can help you do this.

What Is a Pay-Yourself-First Budget?

Essentially, a pay-yourself-first budget asks you to reprioritize your spending categories. Instead of prioritizing categories where you send payments to someone else, whether that be a popular streaming service company or a boutique gym owner, you prioritize payments to yourself. You stop making yourself an afterthought in your budget.

Pay-Yourself-First Expenses

Paying yourself first doesn’t mean giving yourself a chunk of money to go on a guilt-free spending spree. It means using your paychecks to improve your financial well-being. Below are some examples of pay-yourself-first expenses.

Emergency Fund:

Living without an emergency fund is risky. Without one, you might not be able to afford an urgent, unexpected expense the moment that it pops up. You would have to consider a different method for paying off the expense, like going to the website CreditFresh and applying for a loan there. If you happened to get approved for the online loan, you could have enough funds to cover your emergency transferred directly into your bank account in a short amount of time. Then you could pay off the expense and get some degree of financial relief.

You wouldn’t need to consider an online loan if you already had an emergency fund built and filled with savings. You can start building one by making small monthly contributions into a savings account. Even saving up $500 could make a difference.


You don’t want to enter your retirement years with a meager amount of retirement savings. Or worse, no savings at all.

So, you should be making monthly contributions to a retirement savings account, no matter how far away your retirement years might be. If you don’t have a 401(k)-plan offered through your workplace, you should open up an individual retirement account (IRA). This tax-advantaged account is the perfect place to collect your retirement savings and let them grow.


When you don’t prioritize your debt repayments, you prolong their existence. They won’t go away. If anything — they could keep accumulating interest and grow to become even bigger piles to tackle. And if that wasn’t enough of a problem, letting them grow can increase your chances of collecting late fees, defaulting on payments and lowering your credit score. At worst, your debts could go into collection.

You can avoid these consequences by making your debts a budgeting priority. Create a serious debt repayment strategy and then commit to it.

One popular debt repayment strategy is called the avalanche method. It involves making minimum payments on all outstanding debt accounts — except for the account with the highest interest rate. You’ll direct as much as you can toward that account. Once you’ve tackled that account’s debt, you can move on to the account with the second-highest interest rate. And so on and so forth.

Another strategy is called the snowball method — this is the opposite of the avalanche method. You make minimum payments to all accounts with the highest interest rates and then focus on the account with the lowest interest rate. Pay off that account and then move on to the account with the next lowest interest rate.

These payments are really important. You need to stop brushing them off and leaving them for “later.” Follow a pay-yourself-first budget and make them your top priority.

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