Pay Yourself Second!

An excerpt from How to Not Be a Broke Pastor: 

Have you ever heard the saying, “Pay yourself first”? The more reading I do in the realm of personal finance, the more I see it. However, as Christians, I think we need to tweak the saying just a bit.

A Biblical Adjustment

When it comes to the arena of general, personal finance, the slogan “Pay Yourself First” is a helpful guide for thinking about what to do with your money.

As a believer, I would just move it one step over to second place as I believe, wholeheartedly, that the first “payment” we make out of our income should be to the Lord.

I hate to say it, but I’ve known pastors who don’t give. That’s not an exaggeration for the sake of illustration. That’s the honest truth. And while there may be reasons for that, I just think that pastors need to model, to whatever extent they can in their given circumstances, what it looks like to be generous with the income God gives them. They need to learn to “pay” God first.

However, this isn’t a book about giving, and now that I have that out of the way, you should now understand the reason I titled this chapter what I did.

I believe that the Christian version of “Pay Yourself First” is “Pay Yourself Second.” What this means is that, after you give to God, the very next thing you should do with your money is to use it to prepare for your own financial future.

A Three-Fold Approach

In his book, Rich Dad Poor Dad, Robert Kiyosaki does an excellent job of showing how the rich make it their mission in life to use their income to build wealth before ever paying out any expenses.

In other words, when money comes into your bank account, the first thing you should do with it after giving to the Lord is to provide for yourself financially. For the average pastor, this will likely mean three things.

First, it will mean building an adequate emergency savings fund. This money will come out of the salary portion of your income. Every month, before you pay any bills, you should set aside money to cover emergency expenses. A good rule-of-thumb is that you should have between three and six months’ worth of living expenses in your emergency savings. It may take you a while to get there, but if you keep saving, you will arrive at that goal before you know it.

Second, you should open and begin funding either a traditional or Roth IRA out of the salary portion of your income. Again, this doesn’t have to be a super-large amount each month. It just needs to be something.

By the way, this is regardless of whether or not your church provides you with a retirement plan. No matter what, you need to be saving for a time when you will no longer be able to work, and IRAs are probably one of the best ways to do this for most pastors.

Third, out of your housing allowance, you should make an extra principal payment on your mortgage. You say, “But I need to use my housing allowance for repairs on my home.” Ok. I get that because I had to do the same. Sometimes, the most I could pay ahead on our mortgage in a given month was $25, but I tried to pay something . . . and you should too.

A Longer-Term Focus

Once you have built an adequate emergency savings, you should continue to pay yourself second by diverting whatever money you were putting into savings towards your retirement.

Along the way, as your income increases, you should make it a requirement that a certain portion of each pay increase is automatically set apart towards these goals.

For far too many people - pastors included – an increase in salary automatically means an increase in expenses (i.e. they begin spending whatever extra they get). My plea to you is that you not be like everyone else in this area.

If you receive an extra $1,000/year in salary, give to the Lord out of your increase as you are able, and then commit some amount towards these goals. If you do this each time you receive additional income, you’ll never even feel it in your monthly budget, but you will begin to see the benefits of this approach in your long-term planning.

Pay yourself second!


Stacy Potts is a pastor, author and consultant specializing in pastoral compensation and personal finance issues. He is the author of multiple personal finance books for pastors including How to Not Be a Broke Pastor and The Pastor's Guide to Wise Investing. He lives in Virginia Beach, VA, with his wife, Jamie, and their two children, Nathaniel and Hannah. Visit his website at

Should Churches use a SIMPLE IRA?

As the name suggests, SIMPLE IRAs are extremely simple for churches to operate. SIMPLE plans can be setup as either matching or non-matching plans. If a church chooses to use the matching approach, they can match, dollar-for-dollar, each employee’s retirement contributions up to 3% of the pastor's total salary (ONLY their salary and NOT their housing allowance). They can do less than 3%, but no more. In this setup, employees can also contribute up to $12,500 towards their SIMPLE plan as of 2017.

If the church chooses to use the non-matching approach, they must contribute 2% of every employee’s salary towards their respective SIMPLE plans regardless of whether or not the employee makes any contribution.

What I like about SIMPLE plans is that they are, well, simple. They are extremely easy to set up and administrate. What I hate about SIMPLE plans is that the church can only contribute a very small amount towards the pastor’s retirement account.

Obviously, a lot more could be said about the intricacies of and requirements surrounding SIMPLE IRAs. I am not an accountant, tax professional, or certified financial planner, and you should definitely seek counsel from one or more of these individuals before deciding on which plan is best for you and your church.

However, while it is definitely better than nothing, my non-credentialed belief is that you can do a lot better than a SIMPLE IRA for your pastors.

For a nice overview of SIMPLE IRAs, click here.

What do you think? Leave a comment below, or follow me on Facebook and leave a comment there.

Coming Soon!


Pastors are so good at so many difficult things - preaching/teaching, counseling, discipling, caring - but can very often be completely clueless when it comes to handling their money wisely. This can be true of their day-to-day finances, but is often more true in regards to their retirement planning.

The Pastor's Guide to Wise Investing takes the, often, confusing world of investing and makes it simple and easy to understand by compiling and condensing the best advice from the best investors of our day into one simple, easy-to-read guide.