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How To Prioritize Saving Money

Those interested in personal finance sometimes wonder how to prioritize saving money. This will require the proper mindset, so you only have to do that which is aligned with the way you see the world.



Most individuals who are interested in the topic of personal finance like to save money. However, they sometimes struggle when it comes to achieving specific goals. This underscores how important it is to prioritize saving money.

While many people would not want to admit it, saving money comes down to individual preferences. We all receive some type of income. What we do with that boils down to preferences and priorities.

It could be travelling, cars, clothes, certain types of foods, or saving money. Different people value things differently.

Pay Yourself First

One of the favorite phrases of the personal finance community is pay yourself first. The basic idea of this statement is that a portion of what you produce and earn should be yours to keep.

Much of what you produce goes to others in the form of taxes and social security contributions. Out of the net income that you receive, you will be spending money on housing, transportation, food, insurance policies, etc. As you see, your money will go to many different places. Why shouldn’t it go to a savings account under your name?

In the next few sections, we will discuss how you can prioritize saving money beyond paying yourself first. We will discuss the steps involved depending on your income level.

What to Do if you have a Low Income

If your income is low, you start from a more difficult situation. But that may be a blessing in disguise as your personal circumstances can only improve.

If you are spending virtually all of your income every month, it is worth analyzing whether there are any expenses you can cut. Being able to a save a small portion of your salary will boost your confidence and give you momentum for the future.

Nevertheless, if you want save a considerable amount of money, you will have to make earning more money a priority. It is much easier to save 30% of a $5,000 salary than 15% of a $2,000 salary. And the amount saved would also be much larger.

To increase your income, you will have to provide more value to the marketplace. There are endless alternatives to do that. You can either work longer or become more productive by acquiring new skills. You can ask for a promotion, look for a better-paying job, or start your own business. If you are fully committed to earning more money, you will find a way that works for you.

Of course, once your income starts going up, you have to prioritize saving money and continue to improve on your journey.

What to Do if you have a Middle Income

If your income is already average, you should start by paying yourself first. By the time you can afford basic living expenses without having to worry too much, you should stop saving what is left at the end of the month, and instead spend what you have not saved at the beginning of the month.

That requires a new mindset and discipline. And while discipline is important, acquiring the mindset that the money is, by default, yours is even more crucial. You should consider every dollar, euro, pound, yen or peso yours until it is spent.

If you have a monthly income of $4,000 per month and want to save 30% of that, $1,200 are yours and only yours. The other $2,800 will be used to pay for necessary expenses and any discretionary purchases. But the amount you decided to save should never be touched.

That money will generate income if it stays in the bank or be invested. You should continue to work on increasing your earning capacity and saving more money. Whenever your income goes up, commit to saving a larger amount. Whatever is left you can spend.

What to Do if you have a High Income

What is considered high income depends on who you ask. On the one hand, it is determined by where we live. On the other hand, the answer will be influences by the relationship that this person has with money.

People who are good with money tend to put the threshold for what they consider a high income much higher. This is because they know it is possible to make and save a lot more money than most people think.

Regardless of what we consider a high income, let us imagine that our net monthly income is $20,000. At that stage, we should make sure that we pay ourselves first by allocating a specific amount of money to our savings and investments. The rest of our income will be used to finance our lifestyle, however luxurious we want it to be.

The appealing thing about reaching high income levels and make sure that we continue to prioritize saving money is that our net worth will grow very fast. Not only will our monthly savings figure be large, but money will accumulate at a rapid pace.

Thanks to that, whether you are investing your money in assets such as stocks or real estate, or simply keeping it in the bank earning a decent rate of interest, the return on your money will start to be meaningful.

While 5% of $50,000 is a mere $2,500, 5% of $1 million is $50,000. This will allow you to grow your net worth even faster and eventually reach financial independence (IF) so you can take full control of your life.


As we have discussed, improving our financial situation is a matter of priorities and preferences. While personal circumstances must be taken into account, this is only relevant to find out where we stand and the things we should work on. Do not let your present situation discourage you about what you can achieve in the future.

Many people throughout history started from much more difficult circumstances and succeeded. So can you. As a result, you need to prioritize both earning more and saving money.

Both these things are a consequence of adopting a new mindset by which your default position in life is of someone who attracts (earns) and keeps (saves) money. This is how millionaires and billionaires have managed to not only make a lot of money but also keep it.

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And if you want to read about how you can double your savings, check out the following post:
How to Double your Monthly Savings

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