Why Financial Advisors Should Tell Their Clients To Pay Themselves First!

As a financial advisor, the term “pay yourself first” sounds elementary. You know what it means, and you live by it (hopefully).

Although this concept makes sense to you, how do you convey this mantra to your clients in a way that sticks?

Here’s how I break it down using analogies and real-life examples. I first let my clients know that paying themselves first doesn’t have any particular physical manifestations (since money is fungible), but it’s a mindset.

The mindset is that if they want to save X amount of money, they should pretend that each month they receive a “bill” from their savings accounts/investments. They should treat that bill like any other bill (e.g., utility bills, apartment rent, etc.) and pay it off.

Let’s say your client makes $100,000 per year, and to hit their goal, they’ll need to put away 20% of their income. You’d tell them that they need to budget as if they make $80,000. All spending decisions should be based on the amount after saving.

Let your clients know that paying themselves first doesn’t mean they have to set up an automated transfer of money or enroll in a 401k plan. It’s a lifestyle or choice where they’re actively saving/investing X% of their income. Saving is their priority.

The point is for your client to get the money out of their account before they think about it. When they take out 20% (or whatever number) automatically, they’ll forget it’s even happening, and they’ll start budgeting based on the remainder.

If they proceed on their route, which is probably budgeting their entire income, many times, they’ll find a way to justify spending that 20% on something else, either an “emergency” or just something they want.

That’s where you jump in and help them see that setting aside the money first is the best way to get the money “out of sight, out of mind” because most find it easier not to spend money if they don’t see it.

In practice, your clients paying themselves first can be accomplished in several ways:

– An automated paycheck deduction that routes money to their 401k account.

– An automated transfer of $X from their checking account into their savings or brokerage account each month.

– An automated investment of $X into some investment (e.g., mutual fund / ETF)


It doesn’t have to be automated; they could also manually transfer the money or whatever.

Let your client know that this will force them to break their budget down into discretionary, dynamic and fixed expenses, which will help them ‘starve’ their discretionary expenses, and in this case move more money to their fixed ones, i.e., student loans.

It’s easy for most people to become engulfed with paying off as much of their future bills/expenses and completely forget to pay themselves first. It’s your job to make sure they’re planning properly and to let them know that by setting aside money for themselves before paying bills, they’ll be making their money work for them.

Follow us on social media to get the latest and greatest content first.

Back to Blog Home

Eszylfie Taylor is the founder and president of Taylor Insurance and Financial Services and the Creator of The Taylor Method, his online sales system for financial advisors. He attended Concordia University on a basketball scholarship and graduated Magna Cum Laude with a Bachelor’s Degree in Business Management. Prior to founding his own brokerage, he was a standout financial advisor at New York Life, finishing his career there as the highest producing advisor in the history of the African American market.

Mr. Taylor has been a Million Dollar Round Table Top of the Table producer since 2011, which places him in the top 1% of advisors worldwide. In 2015, he was the recipient of NAIFA’s Advisor Today Top 4 Under Forty award. Today, as an active advisor, he continues to build on the sales language, concepts, and tips that contribute to the curriculum on The Taylor Method.