[Glossary](https://pecuvo.eu/en/glossary/) · Budgeting and saving # Pay yourself first **In short:** "Pay yourself first" is the principle that saving is the first expense on payday, not whatever is left at the end of the month. **Simply put:** Most people save "what is left", and usually nothing is left. The idea is old — from George Clason's *The Richest Man in Babylon* (1926). It works best automatically: a transfer to a savings account on the day your pay arrives. Madrian and Shea (2001) showed that when saving is the default, many more people save — we rarely undo what is already set up. The habit matters more than the amount. **Example:** Pay of €1,400. On payday 10% — €140 — goes automatically to a savings account. Over a year that is €1,680, without deciding every month. **Watch out:** Myth: "I will save when I earn more." As income grows, spending usually grows too; the habit is built on small amounts. **Source:** Madrian & Shea, "The Power of Suggestion", Quarterly Journal of Economics, 2001 — https://www.nber.org/papers/w7682 ## In depth in the modules - [Module 8](https://pecuvo.eu/en/modules/the-iron-principles-of-cash-flow/) - [Module 7](https://pecuvo.eu/en/modules/interest-compounding-capitalisation/) - [Module 9](https://pecuvo.eu/en/modules/managing-cash-flow/) ## Related terms - [Saving](https://pecuvo.eu/en/glossary/saving/) - [Regular saving (monthly contributions)](https://pecuvo.eu/en/glossary/regular-saving/) - [Emergency fund](https://pecuvo.eu/en/glossary/emergency-fund/) - [Hedonic adaptation](https://pecuvo.eu/en/glossary/hedonic-adaptation/) - [Personal budget](https://pecuvo.eu/en/glossary/personal-budget/)