+ 1, spot on. I have been doing this too, and to be honest I cannot remember the first book that explained that to me. You see, being self-employed (small business) this is especially relevant as you generate irregular savings. Much more discipline is required but by paying yourself first you eliminate the fear, the irregularity. It is one of the simplest and greatest strategy that I used and to date I use!
I have a separate account and automatic, regular scheduled payments online transfer weekly money from one account to that dedicated account. Not only do I do this for us I also do it for our children and some nephews and niece accounts I set up (unfortunately they have very poor saving parents so I wish to help by teaching them that a very small, automatic, regular payment - like a cup of coffee amount a day - can add to something worthwhile in the longer term - compound growth).
So to add to this strategy remember it should be automatic too as many people would be too lazy to do it manually. Internet, automatic deductions, or direct debits are great for that.
Yes, it was suggested to start at 10% of your income, but my strategy is to live on 70% of net income then direct 10% for pay yourself first, 10% for debts (personal if any, cards, etc...) and 10% for PPOR mortgage. So I never lived by a budget since the 70% I lived on would have to cover all regular necessary expenses first, such as bills, school/medical payments, groceries, car etc.... and then what was left was what I could spend on me/us (entertainment, holidays, luxuries in life etc..). I think most people live the other way round, they spend on groceries, luxury things first and then find not enough money for bills, or debts payments (cards etc...).
Anyway, imagine if all Australians just paid themselves first that 10% and really lived on 90% of their income throughout their entire life...we could perhaps save the next GFC, just by doing this simple thing (food for thought).
