"pay yourself first"

Pay yourself first is one of the first pieces of advice you will here from pretty much any financial advisor or finance blogger. It almost doesn’t even need to be said. Almost.

Unfortunately, a majority of people in the United States don’t follow this tried and true advice. According to a recent survey of Consumer Finances published by Business Insider the median amount in American’s savings account is only about five thousand dollars. This tells me that most American’s aren’t paying themselves first.

Why Should I Pay Myself First?

You should pay yourself first because future you will thank you! Future you will be able to live comfortably in retirement. Future you will have the money to take that dream vacation. You should pay yourself first because you want to be secure and comfortable in the future. It may take some sacrifice now, but even saving a little bit today can pay off big years down the line.

What does paying yourself mean?

Paying yourself first means setting a portion of your paycheck aside for future you before paying your bills and before buying stuff. Many people pay all of their bills and buy all of their stuff first, and then decide if they should save something from the (usually) paltry leftovers. I get it, sometimes you have a lot of bills, and there isn’t a lot of paycheck to go around. If you are in this situation, I understand not being able to put aside some money for savings. But before saying you can’t, investigate your budget and make sure that you don’t have any fat that you can cut. Most people have at least a little fat; but we all know how much harder it is to lose that last tiny bit.

How should you pay yourself first

There are a few ways to pay yourself first, but I think the most tried and true way is to put it on autopilot. I have 7% of my paycheck automatically put into my retirement account, and I have another 3% automatically placed into various savings accounts. So technically, I never even see a full 10% of my paycheck. It goes to the most important thing – Me! The remaining 90% is used for bills, fun, incidentals and additional savings (technically, I pay myself first, and then I pay myself again with whatever is left over after the bills are paid).

What should I do with my paycheck to me?

In my opinion, the best way to pay yourself is by contributing to some type of retirement account; especially if you have an employer match. There are other options as well; you can put money into a savings account or a regular investment account. The main point is to put it someplace where you won’t accidentally spend it or include it in your monthly budget. If you need some tips on how to get started, check out our Beginner’s Guide to Investing.


It’s impossible to overstate how important paying yourself first really is. We want everyone to succeed and everyone to achieve the type of financial independence that works best for them. Paying yourself first is the first step to getting there.

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I finally bought my Vanguard Total Market fund!  I’ve heard amazing things from tons of people about this fund (the biggest perk being the instant diversification), so after a lot of my own research, I decided to buy in. If you are serious about your quest for financial freedom, you should definitely look into investing in a total market fund. As you could probably tell, I prefer Vanguard.

Which one though?

Apparently, there are two different funds that you can buy which are technically “Vanguard Total Market” funds. I had no idea! I knew I wanted the total market fund, but I had no idea what the difference was between these two. Time for more research!  But luckily for you, I did the research so you don’t have to!


Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

Vanguards Total Stock Market Admiral Shares fund is a mutual fund with holdings in the full range of the equity market. This fund invests in small cap, mid cap, and large cap stocks in addition to growth and value stocks.  The minimum buy-in amount for this fund is three thousand dollars, and the minimum additional investments are only one dollar. This is a great fund for someone who wants to track the whole market and also wants to use dollar cost averaging to add to their investment. The expense ratio for this fund is only .04%, which is a total steal!

Vanguard Total Market Fund ETF (VTI)

If you are not interested in adding more money to the fund (outside dividend re-investments) then getting the ETF may be a better option for you. The expense ratio is the same as with the Admiral Shares (.04%!) and there is no minimum buy in amount!  The problem with this fund is that you can’t add to it automatically from your paycheck like you can with the other two. This ETF works more like an individual stock, where you have to go in and do the whole “ask” price thing. You have to buy full amounts at the market price when you place an order, and you will probably have to pay a brokerage fee each time (which varies depending on which platform you use for trading). You can buy more of this ETF whenever you want, but its not as easy to set up automatic investing.

Related: Use credit card rewards to score big!


Vanguard total market fund

which one should I chose?

Like I said before, I chose the admiral shares because I had 10 thousand dollars to invest and I wanted to automatically invest more every paycheck. If you have three thousand dollars or more, this is the absolutely the best option, because it has the same expense ratio as the ETF, and gives you the option to add the automatic investing (and even if you don’t want that now, you never know, you may in the future).

But not everyone has 3k to dump into a fund, and if you don’t it’s better to get started with investing however you can. If you have less than 3K to invest the ETF is a good place to start(unless you want to save up 3K before investing, always an option!). 

 Related: Still unsure about investing? Check out our beginner’s guide!

Clear as Mud?

I know investing can be confusing. I love that Vanguard makes investing in the stock market super easy, especially for the lay person. And hopefully, this short post can hep you decide which Vanguard Total Market Fund will best meet your needs.


This post has been updated! As you can probably tell, there are only two funds in this post. That’s because Vanguard changed the rules for their Admiral Shares Fund – they lowered the minimum investment amount from 10K to 3k! That really helped beginner investors get in on the fund with the cheapest expense ratio. Vanguard used to have an intermediate fund with a 3K minimum investment but a higher expense ratio. This fund is being phased out with the new new rules. 


Final Word

For the sake of a full disclosure, you should know that I have absolutely no affiliation with Vanguard other than having my own account. I will not make any money if you click one of the links, open a Vanguard account, or buy into one of the three accounts I wrote about. I’ve written this post because I have an account with Vanguard, I believe in their product, and I was confused when trying to figure out which fund to purchase. I’m not gonna lie though, if Vanguard had an affiliate program I’d sign up in a heartbeat, because I truly believe in their product (and I’m only going to add affiliate links for products that I believe will add value to your life).

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