The secret to being a great saver

Paying yourself first is a way to save money. In fact, it’s the best way to save money.

The trick is that rather than setting extra money aside, you’re saving for yourself and your future goals right away, before spending the rest on non-essentials. Treat the savings goal like an important bill — just like your rent or mortgage — that must be paid every month. The only difference is it’s a bill you pay to yourself.

“Anybody can save the remnants of a paycheck after they’ve spent most of it,” says George Galat, a California-based financial adviser.

“[Paying yourself first] is purposeful, proactive and implies a level of progression toward a collection of goals,” says Galat.

Here are a few ways to pay yourself first — without feeling like you’re making a big sacrifice.

Set up automatic payments

A common obstacle to saving your money is that the amount you planned to save tends to dwindle toward the end of the pay period.

“The reality is that some competing interest always comes up to reduce if not eliminate well-intended savings,” says Howard Pressman, a Virginia-based financial adviser.

hat’s why one of the principles of paying yourself first is to set up automatic payments into accounts set aside for retirement, debt repayment, or emergency savings. That way you don’t have to consciously think about choosing to save, and won’t be tempted to spend it first.

“If one has automatic savings taking place into the 401(k), Roth IRA or a sweep from checking to savings, it’s going to get done,” Pressman says.

Max out your 401(k) (if you can)

One of the first areas of your financial life you should pay attention to is your retirement savings.

But most people still aren’t saving enough. One in four workers have less than $1,000 saved for retirement.

Setting aside 10% or 15% of your income may seem daunting, but is not as impossible as it might seem.

When Jon Haagen, a New York financial adviser, asks people if they can save 15%, they usually disagree. However, when he rephrases to ask whether they might be able to live on 85% of their income, most say that they can.

“The second way of asking seems less daunting,” he says.