How to Stop Being Broke

I want to talk about some money, habits, money behaviors that are keeping you stuck that are keeping you broke that are keeping you poor. And that’s a lot of us. Before I go any further, I want you to know, I want you to know that I’ve made a lot of great financial decisions over the course of my life. And it pretty much all the bad ones too, I spent the vast majority of my 20s living paycheck to paycheck in and out of credit card debt and not paying attention to my finances, wait until the last minute to pay bills and taxes and all that just essentially, interacting with money in the wrong ways possible, like the wrongest ways possible. So I share that just to let you know that wherever you are, you can get to where it is that you want to go, you are fully capable, you’re worthy, you’re even certainly deserving of becoming financially successful, but you’re not entitled to it. All this stuff requires work, you need to learn about certain things, and then you put the knowledge the have into action. So I’m going to talk about eight things that you could start doing pretty quick, or at least start thinking about, that will help you to break free of this vicious cycle of living paycheck to paycheck or being in and out of debt, or whatever it is, whatever it is that you’re not happy with, I want to help you get better at money. So you can get to where you want to go. Really briefly about me than a financial adviser for over 20 years. At this point, I’m honored to be named to the list of Investopedia as top 100 financial advisors, five years in a row As of recording this video, so doesn’t make me an expert, it just means that I think about this stuff a lot. And more importantly, I was able to personally do it. And if I can do it, well, then you can totally do it too. So number one, need to start paying attention, need to take a very active interest in your personal finances. Fundamentally, there’s never going to be anybody who’s more interested in your financial success than you are. So we must act accordingly. Now, if you want to think about yourself, as the Chief Financial Officer of you and your finances in your household, that’s awesome. If you want to think about yourself, as the Chief Executive Officer, the CEO of your finances, I think that that’s awesome to fundamentally, you while you don’t need to do everything, you need to make sure that everything that needs to get done is actually getting done. These days with the wonders of technology and apps and programs that we have available to us, you can get majority of your financial needs done and sort of outsourced, not for a lot of money, and in some cases for free. And I will list a lot of resources that I’ve worked with over the years that I’ve that I place my trust in. And I think that are great. So this needn’t be expensive, doesn’t need to be super time consuming. I’m not trying to make you into a financial genius or a financial expert. But again, do you need to make sure that the important stuff is getting taken care of. So number one is you need to pay attention. If you are like me, if you were like me and you’re avoiding this stuff, you’re just not doing it need to start paying attention need to manage our cash flow on a monthly basis. And that just means looking at all our transactions and making sure that everything’s doing what we expect it to, we need to keep a budget, that’s just a plan for our money, we need to be doing that on a monthly basis as we’re getting started. So there’s a couple of really simple little things. Step number two, I’m sure you’ve heard this statistic that whatever it is, most people, many people wouldn’t be able to come up with $500 in case of an emergency, they need to go to family or use credit cards. And that’s a crappy place to be. And I was there for a long time. So I get it. So I’m not going to say $500 I’m going to borrow from conventional wisdom and just say that let’s get $1,000 saved up. And let’s get $1,000 saved up in an account, which is separate from your everyday checking account. So don’t just get 1000 bucks saved up where you’re going to spend it and forget like oh, what was that money for what’s there, I’m gonna go out for dinner or buy a new pair of shoes or whatever, you need to open up a savings account or money market account, just that separate you can be with the same bank from your everyday checking account. And I’m not saying that saving $1,000 is easy. I’m not because if you haven’t done it, then it seems like it’s maybe impossible. But stop doing everything until we get that $1,000 saved up and that’s just that is the the seed of our emergency fund have our fully funded cash on hand account. And it’ll cover most minor emergencies or expenses that pop up like car trouble or something like that. Number three is getting a habit of paying yourself first. And this is rule number one, the golden rule. So Habit number one, it gets to rule number one, even though it’s number three on our list, you know, bear, just just give me a little bit of patience here is pay yourself first, that just means that the reason for that is if you’re in the habit of paying everybody else, first, you will get to the end of the month, and there will be no money leftover for you. And maybe you’ll get to a couple of three quarters of the way through the month, and you’ll be out of money, you will have that horrible experience of having more month than you do money. And that’s a crappy sucky place to be. totally get it. So we start paying ourselves first, we start putting ourselves first we start putting our family’s priorities and objectives and wants and needs ahead of everybody else’s, which is exactly where they ought to be. This is a time to 100% be selfish, you’re positioning yourself for success. If you fail to do this, you will fail to put money away for your future. For doing that we are up against time, the longer it takes to start pursuing our financial goals and priorities and all that stuff, the harder it is to achieve them. So get in the habit of paying yourself first, how do you actually do that? Well, a couple of different ways if you have a 401k through your work. So if you work at a company that offers a 401 K, enroll in the 401k. Even if it’s just 1% of your compensation, start putting money in a way, get in the habit of saving money, putting it away for your future, somebody wonderful things happen when we just start doing things, we develop confidence, like, wow, that’s cool, I didn’t think that I was really saving any money. And now I look three for 10 months a year later, I’ve got all this money in there. And I didn’t even miss it. You’re developing self discipline, new skills, nothing but good virtuous things. So if you’re at a company that has a 401k, enroll in that, if you are not, you can open up an individual retirement account or an IRA at most any financial institution, and should be able to do that for really, really inexpensive, if not free. So wherever you bank, you can potentially do it. There are a lot of great companies out there like Vanguard and Charles Schwab and fidelity. I am agnostic, when it comes to that, I just don’t want you to pay a bunch of money to do that. And then just start making contributions. What’s great about a 401k Is your contribution comes out of your paycheck before you get your paycheck. So you’re automatically paying yourself first, if you’re doing an IRA, you can set up for automatic drafts or automatic contributions to come out of your account. And you should do that the first of the month, so that the money is coming out first of the month before you’re paying anybody else. So that is a great way to create some new habits. Habit number four or step number four is to get one month’s worth of expenses saved up. Okay, we talked about that initial $1,000 emergency fund. Now we’re going to start building on that. So we need to pay attention, we need to know how much money we have coming in. So it’s our cash flow, how much we’re spending, we have to know our budget. So that’ll help us to know what one month’s worth of our expenses are.

So if we have no idea what our living expenses are, then we’re not going to be able to do this, we’re not going to be able to budget. But when we do now, you’ll get a sense of it. Well, at some of your expenses are going to be fixed. So that’s easy. So others will be variable, and I get it. So we’re going to be sort of guessing as we’re getting started budgeting. But over time, you will get a better handle on Well, here’s about how much I usually spend on personal care on going out to eat on my hobbies on just stop that’s not fixed. And then you’ll be able to do a better job. So however long it’s going to take you to get one month’s worth of expenses saved up that is the next step in this process. Number five is once we get one month saved up, I want you to attack your credit card debt. If you have credit card debt, we need to get out of credit card debt as soon as possible. It is a trap that many of us fall into me for sure. And it is the worst credit card debt follows you around makes you feel like you’ve got this wet blanket. It’s anxiety causing it. It’s depressing and it feels hopeless. I get it, it sucks. It’s the worst. You’re paying massive interest rates on credit card debt. So you end up going out for happy hour and you buy a beer or a glass of wine or vodka soda, you end up paying for it for five years because you’re paying 25% interest rates. It’s crazy. So put a plan together for whatever it’s going to take to get out of that credit card debt and you have a better sense of it now because you’ve been tracking your cash flow, you understand your budget. So it’s a challenge is if we are not there’s not enough money to go around which is most of us we need to find out where we can be making cuts, making changes so that we have extra money to be able to throw at to be able to pay He off this credit card debt. Now, if you do find yourself in credit card debt, help with it, you want to create a plan, we have a free course at money, lemon academy.com courses, it’s called get out of debt. And you can access that for free, it’ll help you put a plan together for actually getting out of credit card debt. Once you do that, now it’s time to chip away and fully fund our emergency fund. And I want you to get to six months worth of your monthly expenses saved up in your emergency fund. Think about it, this is my cash on hand. So this is money that must be in an account that is separate from your everyday checking account. Six months, I don’t just casually say that even though it might strike you that I just casually said that. I know how much money that is. I know how hard it’s going to be to do that. And I also know that when you are out of credit card debt, and you’ve got six months worth of cash of your expenses, saved up in a savings account or a checking or a money market account that you now have financial peace of mind. And that’s one of the most valuable things in the world. You have financial peace of mind, no guarantees, bad things could still happen. But you are positioned for success. I want everybody to be financially prosperous. I want you to get whatever you want with money. But I tell you get out of debt until you have that cash saved up. You’re just not positioned to do that. Once you have your financial peace of mind, now you’re in position to go and be financially prosperous. And to get out there and do proactive and great things with money. So number seven, start making some plans. Let’s make a plan. I’ve done lots of videos about creating a financial plan doesn’t need to be complicated. It’s figuring out what your goals are goals are what you want. It’s figuring out what your belief system is and what your beliefs are. That’s who you are. And then it’s creating habits. That’s what you do. So in the in the spirit of helping you to do these things. Again, I talked about the free get out of debt course we also have a free goals course, and a free values course which will help you to do everything that I’ve just been talking about. And you will recognize I’m exceptional at naming things. It’s one of my skills and unique abilities, goals course get out that you’re tracking, you’re a smart person. So make plans, make plans for your short term zero to three years make plans for your midterm wants four to 10 and then 10 Plus is long term. You’re fully capable of doing all this stuff on your own. And then number eight is fall in love with doing fall in love with doing we have a tendency to look too far into the future and spend too much time looking into the past when we really ought to and you know it be living in the moment and QRP car baby I mean it and Yolo and whatever FOMO and this that the other thing fall in love with the doing. So when you know and have plans, you know what needs to be done in order to bring that desired reality that you’ve created into your current life to make your what you want and to happen actually happen to human superpower. Pretty awesome. You can imagine any future you want. You can make plans, and then it’s a matter of doing it, doing it doing it doing it. And once you start doing it, you will again become more confident you’ll develop new skills, you’ll feel great and for good reason. You should. It’s amazing. So these are eight steps that if you follow I think that you will find yourself in a far better financial situation you will break free of you know being broke, poor, whatever it is however you feel about your situation. I want you to start feeling great about it. Again, you’re fully capable of it you’re entitled to your you’re worthy of it you’re not entitled to it requires you to work for it. But you can do hard things to do them all the time. Remember, do your part, doing your best

Transcribed by https://otter.ai