ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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emergency funding
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investing
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paying yourself first
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compounding interest
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Detailed explanation-1: -The “Pay Yourself Principle” is a method of prioritizing your monthly spending which puts your savings first. Hence, you need to fund your savings and investment accounts before you pay any other bills.
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 savings account is an interest-bearing deposit account held at a bank or other financial institution.