It is well-known that the most effective way to accumulate wealth and see your net worth growing day after day is paying yourself first! My Wealth Builder explain in details the three simple steps to pull off this only saving strategy you’ll ever need. I summarized the three steps here:

1. Pay yourself first from every paycheck
2. Don’t touch funds from step 1.
3. Invest and grow the funds

These steps look simple and obvious, but human being is emotional. It takes high discipline to procrastinate your spending. Impulse buy happens every single day. So for fellow Malaysian, here is a few simple strategies that might help you to pay yourself first and pay all the other bills later.

Pay Yourself First Implementation Suggestions

1. Save your money in a saving account without ATM card. It makes withdrawal difficult. You would have to queue at the teller counter to withdraw your cash. Which means you need to park your car, get into the bank, press the number machine, wait for your turn, fill up form and sign some documents. Moreover, you had to do this during weekday only during office hour. Save the hassle of withdrawing money, just leave it there.
2. Don’t activate the internet banking service for that account, so that you can only transfer money in, but not out.
3. If possible, open the saving account jointly with your spouse, or mother or anyone who is more disciplined then you. Both party must be present to withdraw fund.
4. Buy an endowment policy. You will lose money if you stop halfway. This is the feature of force saving which will keep you paying the insurance premium until the policy mature. You will be surprise that you actually save a lump sum for your retirement when the policy mature.
5. Invest in investment-linked fund using the top up facility such as the Great Saver Rider on Great Eastern investment-linked policy or PruSaver on PruLink Prudential policy. The advantage of investing in your insurance policy account is that it can be paid by your credit card auto charge.
6. Pay all your insurance policy with credit card. This will make sure you pay the premium-expenses which is actually your saving. Especially those policy which had reach the critical years. It is better to keep paying those policy because 100% of your money will be debited into your insurance account.
7. Invest in unit trust fund using dollar cost averaging. Ask your agent to remind you to invest monthly when you get your paycheck at the end of the month. Isn’t it nice to have someone reminding you to save money?
8. Contribute more into your EPF account. Instead of contributing 11%, you can opt to contribute more if your employer is willing to assist you on the process. You will get more tax relief and less money on hand to spend.

What do you think? Please share the other strategies effective to you.

More article about wealth accumulation:
3 elements of Wealth Accumulation
Do you qualify to save?
Income – Saving = Expenses


Personal finance author and trainer

    23 replies to "Simple Strategies to PAY YOURSELF FIRST"

    • Elan

      Undeniably, “pay yourself first” is very tedious and boring.

      It requires a lot of discipline and patience to do so.

      Another way which help us to do it better is, to calculated your net worth periodically (monthly, quarterly, or yearly).

      Once we notice our net worth grows due to our hard savings, it will motivate us to save more.

      A nice written article KC, I will definitely recommend it to my friends and family

    • Nadarajan

      Tq for info..I’m practice it..

    • ahdan

      Thanks for tips, now i’m practising to invest in Unit trust by using the dollar cost averaging…..

    • Teoh

      Wow! This article was so long ago. I guess it’s never too late to “Pay yourself first”. Just don’t procrastinate.

      • KCLau

        yeap 🙂 make it a habit.

    • Famy

      Hi kclau
      I don’t understand no 7 the unit trust. What do buying every months do if some unit trust value depreciate? I did the rest except 8. For no 7 I usually buy when it first come out and forget sbout that for 2 to 4 years but I cannot appreciate the amount that I got. Please explain. Thanks


      I have to admit that saving account without ATM is best especially if one can have a good income.Thank you for your advice.

    • WYC

      I am very agree with the 3rd option – open a joint saving account, either with spouse or parents. I have this kind of account since last 2 years with my spouse…really need to thank her. It really works!!! Once some amount is accumulated, we either put it in fixed deposit or some other investment link fund. Other than achieving financial target, we can build stronger trust in our relationship too 🙂

      • KCLau

        I am glad that it works for you.

    • Uniswati

      hi kclau,
      ..good article! I hv been paying myself first since last few years after reading few books on personal financing,..and i know It’s worth doing!! [..although sometime i hv to really decided on something, but pay my self first always a priority!]..Now, i already used to the habbit and happy with the result…! You are right, everybody must pay themselves first even how hard it is.

      • KCLau

        This is the most important move of financial planning. Thanks for sharing your experience here.

    • Fairuz

      The way I save my money through:
      1) ASB acc…. da acc book hold by my mom (25%)
      2) unit trust monthly investment (30%)
      3) my beloved mother (15%)

      This way i have a small access to my money even though i love to spend it .
      Btw, my mom was a financial officer 7 years ago….so you know how hard to talk about money with her…hehehe 😛

    • Louis

      Every month I will set aside my “pay yourself first” money in terms of eFD after my salary is credited into the account. Nowadays it’s very easy to set aside a sum of money with the facility of eFD in internet banking. 🙂

    • Lynn

      Hi KCLau,

      enjoy reading it. perhaps another one to add (also to peter)..keep separate accounts for a) savings, b) investment, c) fixed monthly expenses and d) doodads…chances are we need to fix our car, buy bday gifts, go for vacation, all that can be taken from the doodad account (which could be leftover from previous months’s expenses (account c: expenses)…i have just ‘implemented’ this like one year…last time i used to take out from my savings…;( ..and now i dont touch it at all…in fact i can reward myself using the ‘account d: doodad’…b,c,d, i have it with mbb, easy for transferring, if really neccessary..;), except for savings…;)

      • KCLau

        Thanks for your sharing.
        Doodad account is really very useful to separate our savings from being depleted by doodads.

    • Eddy Loh

      Dear KC Lau,

      I read with interest on the RM1,000 relief for the annuity insurance policy. I am actually confuses and also being make confuses by insurance agent on what is actually consider as an annuity insurance policy.

      Can you please give example on to different it.


      • KCLau

        Hi Eddy,

        I think the program available for tax relief is not available in the market at this moment.
        Annuity is a plan that provides yearly income for you until death.
        The hot selling products in the market now is some whole life plans (technically whole life), but function like an annuity.
        You will need to pay the first 8-12 years (plan varies from different companies), and receive income for the rest of your life onwards.

        • Eddy Loh

          Thanks for the infor KC.

          So I presume that the current whole life plan where i need to pay the first 8-12 years does not qualify for the RM1,000 tax relief for annuity policy?


    • Evelyn Naome Mpagi

      Hi Clau
      Thanks for the write up of pay yourself first. It has made a great deal of impact on me since iam very indisciplined as far as spending is concerned. Even when i save on a pure save account i still withdraw it when in a fix.
      I have tried to invest in treasury bills but when they mature i spend it all without a wink!!!.
      I hope i will mature in my spenditure habits.
      The problem is iam self employed and also employe other people who i thought should be paid first.

      Help Clau.


      • KCLau

        Hi Evelyn,

        I believe we all face the same problem like you. Who doesn’t like to spend money?
        I admit that spending money is fun, especially when you don’t have to worry about not having enough to spend.

        I think you can put the money in places where you can’t “see” it. When it is out of sight, it is out of mind.
        For example, an endowment policy, a saving account without ATM card or internet access.

    • Peter Lim

      I clear up my bank account (leaving only a balance of RM 1,000, and RM 1,000 for cash expenses for the month) at the beginning of the month.

      So, any excess (after paying of all the obligations) is in savings, which i’ve invested at the beginning of the month.

      Since my income fluctuates, i can fix my expenses. Anything above that is save (invested, actually) upfront.

Leave a Reply

Your email address will not be published.