CUNA Financial Counselor Practice Exam 2026 - Free Financial Counselor Practice Questions and Study Guide

The spending cycle that promotes the philosophy of "pay yourself first" is one where saving takes precedence over spending. By adopting the cycle of earning, saving, and then spending, individuals prioritize setting aside a portion of their income for savings before allocating funds for expenses. This method ensures that savings goals are met early in the financial cycle, thereby fostering financial security and discipline.

In this context, “paying yourself first” means that after earning income, the individual immediately saves a specified amount or percentage before considering expenses or discretionary spending. This aligns with best practices in financial management, encouraging individuals to build a fund for emergencies, retirement, or big purchases—ultimately leading to greater financial health.

If the cycle were instead focused on earn/spend/earn/spend or earn/spend/borrow/spend, it would indicate a tendency to allocate funds toward expenses or debt obligations first, potentially compromising savings. The earn/spend/save structure also prioritizes spending over saving in its natural flow, which does not align with the philosophy of saving before addressing expenditures. Thus, the chosen cycle effectively embodies the principle of making savings a priority in one’s financial planning.