Pay Yourself First: Automate Your Savings
Move money into savings on payday before bills and spending can touch it. It's the easiest way to build a savings habit that lasts.
In this guide
The best savers do not save what is left at the end of the month. They pay themselves first by moving money into savings as soon as they are paid.
What does pay yourself first mean?
It means you treat saving like a bill. On payday, a set amount goes straight to a savings account, pension, or emergency fund before you pay anyone else. Whatever is left is what you live on.
This removes the temptation to spend first and save later. It also takes willpower out of the equation because the transfer happens automatically.
How much should you save?
A common target is 20% of your income, but start where you are. Even £50 a month builds to £600 a year. The right amount depends on your essential costs. Use our Salary After Tax Calculator to work out what is realistic after tax, National Insurance and other deductions.
Make it automatic
Set up a standing order from your current account to an easy-access savings account for the day after payday. If you can, name the account "emergency fund" or "holiday fund" so the purpose is clear.
Before you start, clear expensive debt such as credit cards or payday loans. There is little point earning 4% interest on savings while paying 20% interest on debt.
Bottom line
Paying yourself first is the simplest way to make saving a habit. It guarantees progress even on months when money feels tight. Explore more strategies in our Banking & Savings guides.
_External resource: Unbiased explains the pay-yourself-first strategy and how to follow it — read the guide.