Final answer:
The major benefit of the pay yourself first strategy is that it encourages consistent savings by treating contributions to savings as a regular expense, helping to build a secure financial future.
Step-by-step explanation:
A major benefit of the pay yourself first strategy is that it encourages you to prioritize saving money. This approach involves setting aside a certain percentage of your income for savings or investments before you use money for any other expenses. By treating savings like a regular expense, it becomes a habit, and over time, can lead to substantial savings. This method can help you build an emergency fund, save for large purchases, and prepare for retirement.
Adopting the pay yourself first strategy is crucial because it ensures that you are making consistent contributions to your financial goals. Financial advisors often recommend saving a portion of your income—commonly cited as 15 percent—immediately upon receiving it. Moreover, having a reliable savings account to cover at least three to six months of living expenses is recommended to protect against unforeseen financial hardships.
In summary, the pay yourself first strategy is an effective way to ensure that saving becomes a regular part of your financial routine and helps lay the groundwork for a secure financial future.