What does it mean to 'pay yourself first'?
Answer:
It means to take part of your earnings and invest it into something for your future.whether a simple savings account or real estate, or mutual funds or bonds..
Take care of your needs.
It means that everytime you get paid automatically take 10% (or however much you want) and put it aside regardless and live like you never earned it. You do this before you pay bills or do anything so you get used to living without it. If you have a comfortable standard of living you should do this with raises as well, if you don't need it, tuck it into savings and act like you never got it.
It means to save a portion of every paycheck before you pay anyone else. I think 10% is usually the most recommended amount.
Pay yourself first simply means making your future the fist priority instead of the last. Often this looks like taking a certain amount of money each month and putting it away in an investment that gets you a little bit closer to your goals. This comes before paying any pressing bills, going out to the movies, or doing anything else that takes money away from your future.
The reason why people talk about this is because generally people operate by paying their bills first, entertainment, etc, and then if anything is left over it goes into savings or into investments. That way of operating is considered paying yourself last because your most important goals, like your retirement and your long-term financial goals, always get paid last.
to take a portoin of your paycheck and stash it away
the theory is that yo ushould learn to live with a little less than you make, and save for an emergency or retirement
it works because most people spend what is at their disposal, so if you mentally thing it is not availalbe, you wont spend it
When you get paid, put some money aside for yourself before paying your bills.
To pay yourself first means to make saving - for yourself - a priority. It means you ought to plan to put a certain amount of your salary into a savings account, retirement plan, or a cookie jar - and make it a priority to do so regularly! Every other item on your routine list - Cd's, clothes, food, etc - should be secondary to your savings plan. Just make certain you save.
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