Concept
Pay yourself first
Pay yourself first is the oldest rule of saving, from Clason's Babylon: a part of everything you earn, a tenth at least, is yours to keep and is taken out on the day the money arrives, before the landlord, the shop or the tax office gets a vote. The amount matters less than the order.
Saving what remains at the end of the month has never worked for anyone, because nothing remains: what we call necessary expenses grow to equal income unless something stops them. The rule reverses the order. The savings leave first, on payday, to an account you do not spend from, and what is left is what you live on. People adapt to the amount in the account with remarkable speed, so a household that saves ten percent first and one that intends to save what is left have the same salary and completely different lives after five years. Ramit Sethi's modern version is the standing order dated on the salary day. Clason's version is the parable of the purse: for every ten coins, spend only nine. If a tenth is impossible this month, start at five percent and send half of every future raise to the order before your expenses discover it.
A real-life example
Merve, a nurse in Ankara, has tried for three years to save whatever remains on the last day of the month, averaging a few hundred lira. She sets a standing order for eight percent of her salary to a separate account on the day she is paid and tells herself she has had a pay cut. The first month is tight. By the third she no longer notices, and the account holds more than the previous three years combined.
How to use it
- 1Set a standing order for at least five percent of income, dated on the day the salary lands.
- 2Send it to an account at a different bank with no card and no app shortcut.
- 3With every raise, add half of the increase to the order before your spending adjusts.