Want A Sure Way to Reach Your Financial Goals? Follow This Rule

Woman throwing paper airplane

Do you find it hard to save money? Are you stressed that you haven’t put enough aside for retirement? Does achieving your life dreams feel elusive?

If this is you, you’re not alone.  

Most people set out to conquer their life goals with the best intentions. However, as the list piles up, so does the risk of items on that list being derailed. This happens because of procrastination, a lack of planning and the human tendency to focus on the fun and easy goals at the expense of the boring but essential ones.   

But it doesn’t have to be this way. 

There is a more thoughtful, easier and more satisfying approach that exponentially increases your chances of reaching your financial goals. Yes, you heard right! 

It’s called “Paying Yourself First.” This is a savvy money strategy where you pay yourself and prioritize your most important goals and financial well-being before paying immediate bills and discretionary expenses.  


When you pay yourself first, you set up automatic monthly contributions from your chequing account or payroll to a separate savings (life goals) account or investment account rather than manually doing this. 

The money that accumulates in the savings account is then used towards funding your life goals such as building emergency savings, taking a vacation, making a down-payment on a home and paying for your retirement. 

A parallel option is to set up a separate automation where money from your payroll regularly gets invested into mutual funds or other investments geared towards your retirement savings and other long-term goals. 


Paying yourself first works for several reasons:

1.  You get out of your own way

All humans have emotions and behaviours attached to money. Those emotions are powerful and will often override your logic and intentions. 

There’s no doubt you intrinsically know you should be saving money for the things that are important. But when it comes to a choice between instant gratification and the dull, difficult slog of long-term savings, most of us choose the former.

Relying on willpower seems great on paper but rarely works. Banking on your memory to put away whatever is left after spending is also a haphazard way of reaching your goals. 

2.  You establish good habits

Believe it or not, achieving your financial goals has far more to do with your habits than your financial knowledge. By paying yourself first, you’re creating structure and discipline – something your brain actually needs. When you start seeing the money pile up, you’ll want to continue with the routine.

3.  You align your spending with your values

When you intentionally plan to save for the things that matter most to you, you’ll gain great satisfaction in setting aside money for those things. You’ll find that spending on the day-to-day trivial things will become less meaningful and less gratifying.

4.  You take advantage of the power of compounding

By regularly contributing to your investment account, you will take the fear out of investing. 

No one can time the stock market but too many people try (and fail). 

By buying into mutual funds and other investments on a timely basis, you take the guess work out and your money will earn compound returns to help you build wealth faster the longer you leave it untouched.  

The wealth effect works even faster if those investments grow in tax-sheltered vehicles such as Retirement Savings Plans (RSPs) and Tax-Free Savings Accounts (TFSAs).


If you have high-interest debt, it may be worth paying that debt before you pay yourself.

That’s because the power of compounding—which works for you when you invest—works against you when you have debt. The interest charged on your loans can wipe out any gains you make when saving as the balance grows. 

Also, allocating part of your paycheque for your goals won’t work if you’re funding your everyday lifestyle and goals with debt. 

If you’re not sure where to start, think about allocating 10-20% of your monthly income towards your goals. Remember that your plan is meant to be fluid and you can always adjust  your allocation.  

One final point: You may feel that you can’t put a lot away, but remember that we humans are incredibly adaptable - we adjust very quickly to living within our means when we’re pushed out of our comfort zone. 


More like this:

RRSPs vs TFSAs: Tax-efficient strategies to build your wealth

The making of a personalized financial plan, for lawyers


By Saijal Patel, Financial Wellness Advocate