i'm getting started on a new budget, and i thought this would be worth looking into. it might sound like a good idea if i knew what it meant, but noone has ever fully explained it to me. can someone give me the basics of this idea? thanks.
2007-09-13 10:24:02 · 6 answers · asked by That Guy Drew 6 in Business & Finance ➔ Personal Finance
Idea is to put money into savings first and then live on the rest. That way you take care of your future and limit your lifestyle to the remainder.
The money you put into savings can be a 401k, IRA (roth or traditional) for retirement or just a money market fund for near term requirements.
Recommendations these days are to put 10% of your salary in retirement type vehicles.
As an example, I used to work at a grocery store. We were paid weekly. They were kind enough to cash our checks at the store. After doing this for a month or so, I realized that I was spending my entire salary since it was cash in my wallet. Going to the Saving & Loan where I had an account to cash my check was better since I always deposited a bit of it into my account and then lived on the rest.
2007-09-13 10:41:02 · answer #1 · answered by Dave 3 · 2⤊ 0⤋
It means putting money away in a savings and/or retirement account first before you buy anything.
In my opinion, it also means being very aggressive with paying down credit card balances when you get paid every payday. It doesn't make sense to put money in a savings account earning 4% when a credit card is charging you 15-20%.
2007-09-13 17:37:05 · answer #2 · answered by Wayne Z 7 · 2⤊ 0⤋
It means that the very first thing you do whenever you get money (paycheck, windfall, tax return, whatever) is move a portion of it into your savings account. Do this before bills or anything else. Basically, you treat your savings account like your most important bill of all.
2007-09-13 17:40:54 · answer #3 · answered by Stephanie C 5 · 1⤊ 0⤋
If your pay check is $600 you pay yourself first by making a $100 deposit in savings or IRA before spending the other money on bills
2007-09-13 17:39:32 · answer #4 · answered by Gerald 6 · 1⤊ 0⤋
I think it means you must save. do it first.. .before giving or paying bills.... it needs to be priority #1.
most people don't save. most people are broke. you need to save money for the financial emergencies that happen eventually to us all.
the goal is to not be like most people. :)
2007-09-13 17:38:25 · answer #5 · answered by Anonymous · 2⤊ 0⤋
It means you own everything.And now that there is real profits to your venture you want to enjoy the benefits of what you own.
2007-09-13 23:06:32 · answer #6 · answered by thiru 3 · 1⤊ 0⤋