What does 'paying yourself first' mean?

What does 'paying yourself first' mean?

• A. Spending on leisure activities before saving
• B. Allocating a portion of income to savings before other expenses
• C. Investing only in stock market options
• D. Using all income for bill payment

Answer: (B)

'Paying yourself first' refers to the financial strategy of prioritizing savings by setting aside a portion of your income for savings or investments before allocating funds to other expenses. This approach emphasizes the importance of treating savings as a non-negotiable expense to ensure financial security and long-term wealth accumulation. By consistently saving a predetermined amount regularly, individuals can build their savings or investment accounts, which can aid in achieving financial goals, such as retirement or purchasing a home. This method helps create a habit of saving and is essential for financial stability, encouraging individuals to place their future financial health above immediate spending desires.

'Paying yourself first' refers to the financial strategy of prioritizing savings by setting aside a portion of your income for savings or investments before allocating funds to other expenses. This approach emphasizes the importance of treating savings as a non-negotiable expense to ensure financial security and long-term wealth accumulation. By consistently saving a predetermined amount regularly, individuals can build their savings or investment accounts, which can aid in achieving financial goals, such as retirement or purchasing a home. This method helps create a habit of saving and is essential for financial stability, encouraging individuals to place their future financial health above immediate spending desires.