Financial Literacy
Saving Habits – Pay Yourself First
Lesson
5
Why This Lesson Matters
Most people try to save whatever is “left over” after spending. Many months, nothing is left. Prices rise, small treats add up, emergencies appear, and your goal gets delayed again. There is a better way that works in every income level and every country: pay yourself first. It means you move money to savings before you start spending—on the same day income arrives. When you do this, saving stops being a wish and becomes a habit.
In Sri Lanka, costs can change quickly—food, transport, electricity, data. If you wait till the end of the month, your plan is already under pressure. Paying yourself first protects your goals from the chaos of daily life. Even a small, steady amount builds confidence. Your future gets funded first; everything else fits around it.
“Save first. Spend what’s left—not the other way around.”
Step 1: What “Pay Yourself First” Really Means
Think of your future self as the first bill you must pay each time money arrives. On payday—or the day you receive cash for a job—you immediately move a set amount to a safe place. That place could be a bank account, a mobile wallet, or a labeled envelope at home. The amount can be a percentage (like 10% of every inflow) or a fixed number (like LKR 200 a day or LKR 1,000 a week). The rule is the same: save first, spend later.
This approach removes the biggest risk in personal finance—waiting. When you wait, life spends your money for you. When you act first, you spend the rest with less guilt and more clarity. You will still buy what you need. You will still enjoy small wants. But you will do it after your future is funded.
Start with a small number you can keep. If your income is irregular, choose a percentage-per-pay rule. For example, each time you earn LKR 2,000 in a day, you immediately send LKR 200 to your buffer. If income is stable, schedule a fixed amount on each payday. The goal is not a perfect number; the goal is a reliable habit that survives real life.
Your first destination is your emergency buffer—the money that protects you from bad days. Begin with a starter buffer, something reachable like LKR 10,000. Then grow toward one month of essential expenses, and later three months. You don’t need to reach the end in one jump. You arrive by paying yourself first, week after week.
Link this lesson to your goals from Lesson 1. When your savings has a clear purpose—exam fees, a tool for work, a training course—you will find it easier to say no to leaks and yes to your future. A saved rupee is not just money; it is a step toward dignity and freedom.
Step 2: Turn Saving into a Daily Habit
Habits are stronger than motivation. Build a simple habit loop: a trigger, a routine, and a reward. The trigger is the moment money arrives (salary, cash from a side job, mobile wallet transfer). The routine is to move your savings immediately. The reward can be small—marking a tick in your notebook, coloring a square on a progress chart, or telling a family member, “Paid myself first today.”
Keep the habit easy. If cash tempts you, move it out of your wallet the same day. If digital accounts confuse you, use a labeled envelope at home for the first month while you learn. If you forget, set a reminder called “Pay Me First” on your phone for the times income usually comes. Make it simple so you can do it even on a tired day.
Use tiny automations where possible. Ask your bank to set a standing order from your salary account to your buffer on payday. If you earn in cash, create your own “manual automation”: the moment you reach home, split the notes—savings first, spending next. If you receive money on a mobile wallet, create a rule for yourself: within 10 minutes of receiving, transfer your saving portion to a different wallet or a bank pot.
Reduce leaks with simple rules. Try a 24-hour rule for impulse buys: wait a day before buying anything unplanned. Practice “save the difference”: if you choose the bus over a tuk and save LKR 90, move LKR 90 to your buffer the same day. End of day, sweep small leftover cash into your saving envelope. These micro-moves look small, but they teach your mind a new story: “I am a saver, every day.”
Finally, protect your saving from yourself. Keep your buffer in a place that is easy to put money into and a little harder to take money out of. “Friction” helps. If you must withdraw, write the reason. Emergencies happen; guilt is not useful. But a note keeps the buffer honest and encourages you to refill it quickly.
The Golden Rule
Save first. Fund your future before you fund your day.
Saving Last vs. Paying Yourself First
Save Last (Leftovers) | Pay Yourself First |
Savings depend on luck | Savings happen every payday |
Goals get pushed to “later” | Goals move forward each week |
Emergencies = debt and stress | Emergencies = buffer and calm |
Hard to say no to leaks | Easier to say no—future is already funded |
Money controls you | You control your money |
Exercises: Your Turn to Build the Habit
Exercise 1 — Choose Your Saving Rule. Decide a starting rule you can keep for the next 30 days. If income is stable, pick a fixed amount (e.g., LKR 1,000 every payday). If income is irregular, pick a percentage-per-pay (e.g., 10% of every inflow). Write the rule at the top of a fresh page: “Each time I am paid, I will save ____.”
Exercise 2 — Pick Your Saving Place. Name one safe place for your savings: a bank account, mobile wallet pot, or a labeled envelope at home called “Buffer”. Set it up now. If it’s a bank, create a standing order or a calendar reminder. If it’s cash, place the envelope where you will see it daily.
Exercise 3 — Start Your Starter Buffer. Write a reachable first target—LKR 10,000 is a good start. Below it, list your next step—one month of essential expenses. Under that, write three months. For this month, your job is only the starter. When you hit it, celebrate with something small but planned.
Exercise 4 — Set the Habit Loop. Define your trigger and routine: “When I receive income, I will move my saving portion within 10 minutes.” Choose a reward: a tick box, a colored square, or a short message to someone who supports you. Keep a simple tally—30 ticks in 30 days.
Exercise 5 — Save the Difference (Daily). Pick one leak from Lesson 3—soft drinks, extra tuk rides, random snacks. Each day you skip one, move the exact rupees you did not spend into your saving place. Write what you skipped and how much you moved. This turns self-control into visible progress.
Exercise 6 — When Income Rises, Capture Half. If you receive a raise or a new side stream, commit to this rule: send 50% of the increase to savings for the first three months. You will feel the benefit and also build the buffer fast.
Quick Win
Today, move LKR 200 to your Buffer and write it in your notebook. If income arrives this week, apply your saving rule the same day.
Common Roadblocks (and Simple Fixes)
“My income is too small.” Saving is not about size; it is about order. Even LKR 50 a day trains your brain. When income grows, the habit is ready to carry larger amounts.
“Emergencies keep breaking my savings.” That is exactly why we build a buffer. When you must withdraw, write the reason, then restart the habit the same day with a smaller amount if needed. The habit must live, even on hard weeks.
“Family needs everything now.” Share your plan. Show how a buffer prevents future borrowing and stress. Offer planned treats inside a small “wants” amount from your budget so no one feels punished.
“I forget.” Tie the habit to a fixed action—when you arrive home, before dinner, or after placing your phone to charge. Put a sticky note on the mirror: “Pay Me First.” Set an alarm titled the same.
“I’m afraid to keep money in the bank.” Use a reliable bank or mobile wallet for savings and keep only day-to-day cash at home. If you prefer cash savings, use a sealed envelope and open it only at the end of the week to deposit part of it safely.
Keeping Yourself Motivated
Make progress visible. Draw a simple savings thermometer for your starter buffer of LKR 10,000 and color it in as you pay yourself first. Keep a small list of “wins”: a week with 7 ticks, a leak you redirected, the first time you reached LKR 2,000. These proofs build pride.
Link your habit to your goal. If paying yourself first moves you to exam fees in six weeks, write the finish date on your calendar. If it helps you buy a tool for work, place a photo of that tool near your study table. The clearer the picture, the stronger the habit.
Combine saving with earning. From Lesson 2, pick a two-hour weekly earning slot. Each time you earn from that slot, send a portion straight to savings before anything else. When earning and saving work together, your plan speeds up.
“Small amounts, repeated, beat big amounts that never happen.”
Your First Step is Complete
You now know how to make saving automatic: fund your future first, every time money arrives. Choose a rule you can keep, pick a safe place, and build your starter buffer. Protect the habit with a simple loop—trigger, routine, reward. Use tiny rules like “save the difference,” the 24-hour pause, and end-of-day sweeps to keep money flowing to your goal.
Start today: write your rule, set your saving place, and move LKR 200. When income comes, pay yourself first within 10 minutes. Tell one family member your plan so they can support you. This is how stability grows—quietly, clearly, and with discipline.