Wealth Rule #2: Pay Yourself First

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This is Rule #2 in our 7 Rules to Live a Wealthy Life series. If you haven’t yet, check out the overview article of all 7 Rules to see how these principles fit together. Each rule builds on the others, creating a foundation for long-term financial security and freedom. Rule #1 covered keeping housing costs approximately 30% of your income. Rule #2 now focuses on making sure you always put yourself first financially.

How can we start right now? Decide that for every income that comes to you, as highlighted in the 'Richest Man in Babylon', “A part of all you earn is yours to keep.”

Intro

For employees, paying yourself first means setting aside a portion of each paycheck before bills or lifestyle expenses. Before bills or lifestyle spending, set aside at least 10% of your income for savings and investments. This is the Habit of 10%. Think of it as paying your future self a dividend every month. The priority and direction of your money changes how you approach what you have. As Warren Buffet highlighted:

“Do not save what is left after spending; instead, spend what is left after saving.” — Warren Buffett

Most people do the opposite — they spend on bills, lifestyle, and debt, and then hope something is left to save. Usually, nothing is. Paying yourself first guarantees that you’re building financial security every month, no matter what else happens. You build a sense of wealth and prosperity by putting yourself first.

As Jim Rohn said:

“Poor people spend their money and save what’s left, while rich people save their money then spend what’s left.” - Jim Rohn

Why This Works

By automating savings or investments before any spending:

• You build wealth consistently.

• You reduce lifestyle creep.

• You train yourself to live on what remains.

Even if you can only start with 5%, the discipline matters more than the percentage. Over time, increasing this habit e.g., to 10% of all incomes, compounds into real financial freedom.

Even micro-transactions e.g., $5.12 or $0.48, build the habit of putting 10% from an income to savings.

✅ Rule #2 for employees is clear: Always pay yourself first, even if it’s just a small amount. The habit is what creates long-term prioritization of yourself and your security.

Quick Checklist to Start Paying Yourself First

1. Decide on a percentage – Start with 5–10% of each paycheck. Work up to 10%, or jump straight in with the next paycheck to 10%! You can live on 90% of your current income. If not, then a little cutting may be needed.

2. Open a separate account – Savings, Roth IRA, or brokerage account. If you want easy access to the money, a High Yield Savings Account (HYSA) will have higher interest payments than a standard savings account.

3. Automate transfers – Schedule deposits right after payday. You can even ask your HR department to transfer 5-0% to a separate account, or change the allocation yourself.

4. Treat it as non-negotiable – Consider it a fixed expense. You are building margin and security. Enjoy saving more than spending the whole paycheck.

5. Increase over time – As income grows, raise your savings percentage.

6. Review quarterly – Make sure contributions align with your goals.

   
   

➡️ Next up: Wealth Rule #3 – Limit Lifestyle Debt.

To your success.