How to Save Money and Pay Yourself First

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By Jeremy Taylor

There is a simple yet powerful formula if you are interested in learning how to save money and pay yourself first.

“A part of all you earn is yours to keep. It should be not less than a tenth no matter how little you earn. It can be as much more as you can afford.” These are words of wisdom from George S. Clason’s 1926 book on wealth building, The Richest Man in Babylon.

It is filled with remarkably simple “cures” for being broke. The rule of 10% is the foundational truism for building wealth. It means save no less than 10% of every dollar that you make, earn or receive. This is one of many insightful lessons about personal financial advice presented in Clason’s collection of parables.

Here is the formula to calculate 10% of your earnings:

Divide your earned dollar amount by 10.

Earnings ÷ 10 = 10% of earnings

Example: $600 ÷ 10 = $60.

Example: $1,200 ÷ 10 = $120.

Apply this to every single dollar you earn. Money that seems to come out of nowhere is referred to as a “windfall” and should also be included.

It is important that you build this habit of saving 10% of everything into your routine and never break from it. The power behind 10% is that it is a small enough percentage of your net income to not affect your normal budget. In other words, you can build your budget using the remaining 90% of your income EVEN if you are living paycheck to paycheck.

What is a budget? A budget is a plan or goal for how to spend the money that you earn. It should be detailed to the VERY PENNY, including your 10% in savings. People usually make budgets every month because most people live on a monthly salary.

If you have a solid budget, you will find you can afford to pay your rent and your bills on time, and pay for other expenses like gas and groceries. You can also budget to have a little fun every month or buy clothes for the family, while still being able to save 10% of your monthly salary.

Another fun thing about saving 10% of every dollar is that it grows quickly. Time flies and at the end of the first five months of savings you will realize you have saved a whole paycheck! After 10 months you will have saved an entire month’s salary!

Of course, life happens and you may need to touch your savings to pay for an unexpected bill or expense. Do not be discouraged if you fall off the savings wagon. Just get back on it. But beware of touching your savings for anything else that can rob you of your momentum towards riches.

There are more advanced steps to building wealth that are just as simple, but this first step must be mastered in order to get the most bang for your buck. Without this as your foundation, you may not be able to teach your money to work for you while you sleep. So take saving that 10% seriously, and have fun watching your money grow miraculously.

Want to learn more about finances online for free? The Consumer Finance Protection Bureau has one of the best free budget worksheets available. Visit: and take a look.

Have you ever wanted to meet with a financial coach? Did you know that you can find them online for free? Visit: to set up a free appointment with a personal finance manager or check out their other features.

Whatever you do, start by saving your hard-earned money so eventually it will work hard for you. After all, a penny saved is a penny earned.