Dear Dr. Per Cap: I can’t save money!  No matter how much I think about it and really want to do it, I just can’t seem to put anything aside out of my paycheck. What’s up with that?

Signed, Buffalo Nickel

Dear Buffalo Nickel:

Living paycheck to paycheck and not saving a dime is a habit – a bad one!  You need to replace it with a good one.

How about the habit of paying yourself first?

On your paycheck stub, there are always deductions made before you get your “net” pay or take-home pay.  They are things like federal and state taxes, insurance premiums, charity donations you chose to make through your company’s payroll deduction, and perhaps other things.  All of these items are getting “paid first” before you ever collect your take-home pay.

So make yourself first, too, by way of setting aside money for YOUR savings.

You can do that in a few ways, or use a combination of them. 

  • If you signed up for direct deposit into your checking account, you can probably arrange with your bank to automatically divert a portion of it into a savings account each time a paycheck deposit is made. You can choose the amount, and the bank will help you set up a savings account if you don’t already have one.
  • If your company has a retirement plan, sign up to funnel some of your pay into that plan each paycheck.  These are usually invested for you in some way so your money may even grow over time. At some companies, your funds might be matched at a certain level with “free money” provided by your employer. Take advantage of that. It truly is free and should not be left on the table.
  • If neither of those options is available, then make a conscious effort to do it yourself.  If you actually cash a paper check every payday, then take some of it and put it into a savings account right away, or at least stash it in the cookie jar or mattress at home.  If you have direct deposit, take the time to actually transfer a consistent amount into your savings account each and every paycheck.


The key is to just get used to doing it.  By repeatedly doing this, you’ll get into the habit of regularly setting aside some savings and paying yourself first.  You don’t have to start with a big amount. You can make it nearly painless by starting with a small amount that you won’t even notice, then increase that amount as you get more used to saving money while finding other ways to save on expenses.

Finally, if you don’t think you can spare even a small amount into your savings each paycheck, here’s an exercise that will help you find out that you CAN spare it.  For a week or even a month, carry a notepad with you and write down each and every expenditure you make and what it’s for, whether it’s paying the rent or buying a cup of coffee, paying on your credit card bill or plugging a parking meter. After a week or a month, look at where you are spending your money and how much of it you are spending.  No doubt you’ll see places where you can easily save a few bucks, or even a lot more, without much effort. Stop spending on those things you decide are unnecessary and begin putting that amount into savings each pay period. Remember: pay yourself first, and make savings a habit!

Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit www.firstnations.org. To send a question to Dr. Per Cap, email askdrpercap@firstnations.org.