ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The advantage of paying yourself first out of your paycheck is that you build up wealth to secure your future and create a cushion for financial emergencies, such as car break down, financial crisis, or unexpected medical expenses. Without savings, many people experience a lot of stress.

Detailed explanation-2: -When you pay yourself first, you pay yourself (usually via automatic savings) before you do any other spending. In other words, you are prioritizing your long-term financial well-being.

Detailed explanation-3: -With a pay-yourself-first savings strategy, your savings always comes first. This means dipping into savings is almost entirely off-limits. By following this strategy, you would rather pay a bill a month late than take money from your savings to pay it off. This is also why the strategy works.

Detailed explanation-4: -Get organized. The first step to taking control of your finances is getting organized. Make a budget. Invest in yourself. Save for retirement. Protect your finances. Build an emergency fund. Pay off debt. Invest for the future.

Detailed explanation-5: -Set several smaller savings goals, rather than one large one. Set yourself up for success from the start. Start with small, regular contributions. Automate your savings. Don’t increase monthly spending or open new credit cards. Don’t over-save.