International Baccalaureate (IB) Practice Exam 2025 – Complete Study Resource

The concept of "paying yourself first" in budgeting emphasizes the importance of prioritizing savings over other expenditures. By setting aside a portion of your income for savings before addressing any other expenses, you ensure that you are building a financial cushion or achieving specific financial goals, such as saving for retirement or an emergency fund. This method instills discipline in financial planning, making it less likely that individuals will spend their available funds unwisely.

Other options reflect different financial strategies or priorities. Paying bills before saving may lead to less money available for savings after essential expenses are covered, which does not align with the principle of ensuring savings are secured first. Prioritizing entertainment or purchasing luxury items before considering savings can lead to financial instability or lack of preparedness for future needs. Therefore, the correct approach of saving first directly supports long-term financial health and security.