Why Paying Yourself First Isn’t Your First Instinct (And How To Fix It)

Have you ever opened your mailbox and found an overdue bill . . . from yourself?

How crazy would that be?! But think about it. After all, it seems perfectly natural to pay your mortgage, your utilities, your cell phone bill and everyone else first each month.

But why shouldn’t you demand some of your own money? Why shouldn’t you—the person who earned all that income—be able to lay claim to it before the rest of the world?

The Problem: How Most People Think About Saving

Here’s how the month usually goes, though: You get your paycheck. You pay for your needs, you pay for your wants and you stash what’s left over into a savings account. Except that amount ends up being tiny at best!

Psychological studies show that most people tend to be far too optimistic about two critical things:

  1. Their ability to stick to a budget; and
  2. The likelihood that they won’t experience a financial emergency.

In fact, a recent Bankrate survey says that a mere 41% of adults have the money in savings to pay for an unanticipated expense. That means 59% are crossing their fingers—hoping nothing bad ever happens and that they can continue to work until the day they die! It’s a recipe for disaster.

Have you heard of Parkinson’s Law? It states that work expands to fill the time available. Without conscious intervention, the same principle applies to your money. Your expenses expand to fill the amount of income you have.

That’s why—no matter how much you earn—your expenses find a way to eat up your entire income . . . if not more! So even if you get a raise or a big bonus, lifestyle creep sets in and introduces new bills to suck up that extra money.

The Critical Mindshift: Pay Yourself First

Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.

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