Source: Long-standing personal finance principle; popularised by George S. Clason (The Richest Man in Babylon)
Set aside savings as soon as you are paid, before spending on anything else. Saving becomes a fixed commitment rather than whatever is left over.
Educational content only, not financial advice. For decisions about investments, pensions or debt, speak to a regulated financial adviser or a free service such as MoneyHelper.
When to use it
Use it when you intend to save but rarely have money left at the end of the month.
How to apply it
Decide on a monthly amount or percentage to save.
Set up an automatic transfer to savings on or just after payday.
Budget for the rest of the month with the remaining money.
Review the amount every few months.
Increase it when your income rises or a debt is paid off.
Tip: Start with a small amount you can sustain; you can raise it later.