ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -What Is Pay Yourself First? “Pay yourself first” is an investor mentality and phrase popular in personal finance and retirement-planning literature that means automatically routing a specified savings contribution from each paycheck at the time it is received.

Detailed explanation-3: -’Pay yourself first’ is a reverse budgeting strategy where you build your spending plan around savings goals, such as retirement, instead of focusing on fixed and variable expenses. This prioritizes savings, but not at the expense of necessary expenses like housing, utilities and insurance.

Detailed explanation-4: -Generally, the bills you should pay first are the ones that cover necessities-the main resources that keep you and your family safe and healthy. These necessities include shelter, water, heat and food. Once necessities are paid for, focus on expenses related to your vehicle.