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'Pay yourself first' is a personal finance strategy that encourages you to save money before spending it i.e., prioritising savings over expenses.
Paying yourself first means using a fixed amount of your paycheck for your savings and investments, and using the remainder on your expenses.
After getting their monthly paycheck, a majority of people make their saving decisions after paying their bills, groceries, rent, etc.
The principle at its core requires us to treat our savings like a “non-negotiable bill” that needs to be paid first.
While the initial goal will be to create an emergency fund, you could eventually start saving to fulfill your short-term and long-term financial goals.
By saving a portion of our salary, we ensure enough for bills and emergencies, while avoiding impulse spending and exceeding our budget.
Once you decide how much to save, set up automated deposits and SIP autopay to ensure consistent savings and investments.
Following this principle doesn’t mean being irresponsible and not covering your debts — if you have debt, it is important to deal with it before saving.
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