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Pay Yourself First

Hey friends,  I was thinking today about the phrase 'pay yourself first'. It's one of the most import
Pay Yourself First
By Ali Abdaal • Issue #79 • View online
Hey friends, 
I was thinking today about the phrase ‘pay yourself first’. It’s one of the most important rules of personal finance. The idea is that whenever we get money coming in (eg: our salary), we immediately put aside some percentage (eg: 10-20%) for our savings / investments. Only when we’ve done that do we worry about things like paying rent, buying food, going out etc. 
Here’s what JD Roth (writer on the great website Get Rich Slowly has to say on the topic:
When you pay yourself first, you’re mentally establishing saving as a priority. You’re telling yourself that you are more important than the electric company or the landlord. Building savings is a powerful motivator — it’s empowering.
Paying yourself first encourages sound financial habits. Most people spend their money in the following order: bills, fun, saving. Unsurprisingly, there’s usually little left over to put in the bank. But if you bump saving to the front — saving, bills, fun — you’re able to set the money aside before you rationalize reasons to spend it.
Earlier today, I was eating out at a Pakistani restaurant in Aberdeen, Scotland with a few friends. We ordered some biryani, nihari, lamb karahi and (after much deliberation) a mixed vegetable curry thing to try and be healthy. When the food arrived, the veg was closest to me, and so I spooned some of it into my plate first. After that, I found myself having smaller portions of the rest of the food than I normally would’ve. My friend sitting across from me asked 'why are you taking the veg first?’. I immediately joked 'because I want to pay myself first’. 
My friend didn’t get the reference (he isn’t a personal finance nerd sadly) but I realised after I said it, that the 'pay yourself first’ mindset applies to so much more than just money. Most of us treat veg as an afterthought - we put the carbs and protein in our plates first, and leave the veg to the end to take up whatever space is left on the plate. The veg is often the healthiest part of the meal, and so if we ’ paid ourselves first’, we’d prioritise the veg over the other stuff. 
When going through our to-do list, if we paid ourselves first, we’d prioritise the most important, highest leverage task. Instead we tend to put that off, doing menial things like checking our email, or ticking off the less important activities first.
When approaching the end of the day, if we paid ourselves first, we’d prioritise getting 7-8 hours of sleep, rather than scrolling though instagram or reading paranormal romance books until 3am. 
So I’ll leave you with the question - what other parts of our lives can we apply the 'pay yourself first’ mindset to?
Have a great week! 
Ali

Join my Team
In case you missed it last week - I’m in the process of hiring the first full-time member for my team 😁 It’s for the Head of Content role - here’s some more information about it. If you (or anyone you know) might be a good fit, I’d love to hear from you :) 
This week on Not Overthinking
Not Overthinking is the weekly podcast hosted by me and my brother. If you enjoy these emails, you’ll hopefully like that too. You can listen on Apple PodcastsSpotifyGoogle PodcastsCastro (my favourite podcast app) or any other podcast app - just search for ‘Not Overthinking’. 
Stuff I enjoyed this week
1 - Podcast - I loved the interview with Jim Collins on The Knowledge Project podcast. They talked a lot about what makes a great business, discussed the flywheel concept that I mentioned in this newsletter a few weeks ago, and a tonne of other interesting things.
2 - Podcast - I recently discovered The School of Greatness podcast. It’s got a very American name, but the first episode I listened to was an interview with Dave Asprey, author of a new book about how to combat ageing and live healthier etc. The episode was packed full of actionable advice, and I can’t wait to check out the guy’s book.
3 - Podcast - It’s been a good week for podcasts. There were about 6 in total that I added to my Notion Resonance Calendar, but the final one I’ll mention here is Noah Kagan’s interview with coach Bill Courtney, a US high school football coach who an Academy Award-winning documentary was based around. Other than being a very pleasant listening experience, the episode touched on some interesting points about team leadership, how Trump’s trade war with China affects the common man, and the importance of looking after your people.
Kindle Highlight of the Week
These hours are all you’ve got. There is nothing in your life that is more valuable than your time, the moments you have left. You cannot put too much awareness and intention into the way you invest those moments.
From Your Money or Your Life by Robin et al. Resurfaced with Readwise.
This week’s video
How I Made a $1 Million Dollar Business in Medical School - 10 Tips for Entrepreneurs
How I Made a $1 Million Dollar Business in Medical School - 10 Tips for Entrepreneurs
Did you enjoy this issue?
Ali Abdaal

Hey friends, I'm Ali, a Cambridge medicine graduate now working as an FY2 junior doctor. I spend most of my spare time making YouTube videos, but every Sunday I send out an email 'newsletter' with some thoughts, life lessons and interesting articles I discover on the internet.

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Ali Abdaal, Cambridge, UK.