ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The idea is to ‘pay yourself’ your savings at the beginning of each month before you spend on your monthly expenses. This way, you plan not only for the present but also for the future. After you have set aside your savings, you can prioritise and adjust your expenses to fit within the rest of your income.

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: -What does “pay yourself first” mean? Paying yourself first simply means that you make it a habit to put money into your savings account first-as soon as you get paid, and before you have time to spend it on other things. By making saving your first priority, you make sure it gets done.

Detailed explanation-4: -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-5: -A budget is a plan you write down to decide how you will spend your money each month. A budget helps you make sure you will have enough money every month.