Retirement Planning

Learn How to Save More Money by Paying Yourself First

Saving money can be a challenge, but the trick is to prioritize. A basic practice can be as simple as paying yourself first by making the first payment of each month into your savings account. Tips on learning how to save more money can help you get a good head start on something as long term as retirement, or simply being able to put a little bit away for emergencies and rainy days.

How to Save More Money by Using This 1 Easy Tip

People often ask themselves how they can save more money; a task that in theory sounds easy, but in fact can be a real challenge for many families. While most of us want to save more, there never seems to be enough left over once things such as the mortgage, utilities, and car payments are made. As a study by Springleaf Financial1 revealed, even high-income earners aren't saving enough, pointing out that saving isn't just a function of income, but the ability to live within your means and finding a way to save on a consistent basis.

Why paying yourself first may be the best way to save more money

While it may not be a new concept, paying yourself first can be an effective way to ensure that you're saving something. It works because you're not just saving what happens to be left over from your paycheck, but taking your cut before anyone else gets a slice of your income. In doing so, you'll essentially be forced to budget what's left.

First, decide on how much money you want to commit to saving every month. When you sit down to pay your bills, write yourself a check for that amount and deposit it into your savings account. Or, since most financial institutions offer online banking services, you can also transfer the funds from your checking account using your home computer, tablet, or smart phone. Then, pay your bills as usual.

If you find that you're falling short of cash every month, then you may need to adjust your set amount temporarily, or, you could be proactive and look for ways you might be able to make up that extra cash (such as brewing your coffee at home or shopping at a discount store for certain groceries). Be sure to reevaluate your budget every 3-6 months to see where you might be able to “adjust up” your set amount so you can get ahead.

Once you've established the habit of paying yourself first, your next order of business is to figure out how to save enough money to create an emergency fund. Then, think about where you might want to allocate a portion of your savings to make your money work even harder for you. For example, do you need to put away more money in your retirement accounts? Do you anticipate having to purchase a new car in the near future?

Nobody said that saving more money was easy. But considering that 43 percent of the U.S. wouldn't be able to go more than a month without a paycheck, is a clear indicator that you need to start somewhere. A good way to start saving more money is by paying yourself first!

1,2The 2014 Springleaf Financial Strength Survey
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How to Save More Money

Many people have the desire to save more money, but sometimes don't know the first place to start. By putting away a little bit of each paycheck first - before you pay any of your other bills - is an easy way to save more money for retirement, a rainy day fund, or for other unexpected emergencies. For more information, visit the Protective Life Learning Center.

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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