What is & quot; paid first & quot; Media?

One of the most important principles of personal finance is "pay yourself first."

However, many people find that the sentence is confusing. If you are independent, you can not as someone who "paid" to conceive themselves. You get paid by your boss. Or?

What do you mean with the first payment and how they relate to the households?

What it means

"Pay yourself first" not on how to obtain earn money, as opposed to what the sentence means. It refers to the way in order to save money.

The term means that you are to pay their own savings accounts, and the first. For example:

Why "first"?

Most people say they can not save enough money for retirement enough, or invest better, or save an emergency fund large, since they do not, save the money for more.

That's why personal financial advice says you should pay these bills first. Treat it as a law. Approach the same as you treat your phone bill or electricity bill.

In fact, the priority over all other accounts. To the "bill" the most important that you save to pay. The payment of the invoice first.

For what? Since this increases the likelihood that you will actually save a significant amount. Converts will save you money from a "desire" in need. Your retirement and emergency funds are paid to a bill each month.

But I can not keep up!

Many people say that they can not meet their current accounts. If you pay first, literally running them to come before the rounds of the money, they say.

Most experts responded that people should undertake in any event to pay in the first place. Once you make the commitment, they need a way to pay your bills to find others. You may need to take a second job. It could mean cutting some bills, like cable TV. Probably a combination of both earn more and spend less necessary.

But here's the problem: most people are not enough to have a second job, take second-hand clothes and cut your cable TV for the sake of commissioning an additional $ 400 a month to motivate your account retirement. However, they are motivated to do so if they are in danger, are in default on their bills and enough of your heat.

"Pay yourself first", in other words, is a personal financial advice that beats in the people who make and why to save money heart.

Analogy

Why do many experts recommend exercising first thing in the morning, at the beginning of each day? There is a physiological reason. The human body does not have physical capacity to work by 6 clock necessarily in the high

Instead, it is a psychological reason. Many people say they have no time to exercise. And in fact, if a person goes to work and then later try to exercise often skip the gym. The need to stay up late at work, taking a child to soccer practice, running errands, or do a number of other tasks.

Therefore, experts advise people often pay attention to first thing in the morning to practice and then make your day.

"Pay yourself first", which works on the same concept. When people try to pay for everything else, and then save it, often find that they left nothing more. But if people save first, then to pay the bills, to force yourself to make ends meet.