It sucks to have no money.
Systemic poverty is present all over the world and all over our Country.
Close to half the people on Earth live on less than $5 a day.
Almost half of Americans are living paycheck to paycheck, which means they’re effectively broke.
And being broke isn’t limited to low-income earners.
In a recent survey, 60% of Millennials earning over $100,000 a year reported living paycheck to paycheck.
When you’re living paycheck to paycheck and spending all your money, it’s impossible to get ahead financially.
At the same time
There are 2,604 billionaires in the world, and 55.8% of them are self-made.
Over 80% of millionaires in the United States are first-generation. That simply means their money wasn’t inherited.
I share that, not because it’s my goal to make you a billionaire, but to tell you the promise of America is very much alive and available to you.
In the land of opportunity, you can break the cycle of poverty and become financially successful.
And the first step on that path is financial security. That’s what I want for you.
Here’s what we’re going to talk about:
Let’s get started
The reasons people struggle
Humans are creatures of habit. We all have patterns we follow.
Some patterns are patterns of necessity. We’re forced to work two jobs in order to pay the bills and there’s very little time left over for anything else.
Some patterns are patterns of sickness. We’re trapped in addiction or mental health struggles.
Some of our patterns occur from a lack of literacy or understanding of personal finance.
The bottom line is this: you have patterns you’re following everyday. The more you can recognize yours, the better off you’ll be.
When you’re able to identify the patterns which aren’t serving you and you can break them and replace them with more positive habits, you’re moving closer to the life you want.
Hopelessness is also a factor keeping people trapped in poverty.
When we don’t think there’s any escape from the lives we have, what incentive is there to even try?
And many of us are stuck in a pattern of survival. I talked about the reality of having to work multiple jobs or long hours.
When you’re in the situation of having to devote all available resources to making ends meet, it’s Impossible to get ahead. Proactive planning isn’t possible.
The rules of money
There are truths about money. Things that have always and will always be. Understanding and putting those truths to work for you is a key to getting ahead financially.
We’ve all experienced having more month than money. Parkinson’s law tells us that work will expand to fill the amount of time available for its completion. The same is also true of expenses.
If we don’t put parameters on our expenses, and earmark funds for ourselves, our expenses will eat up all of our money.
Because of this, the Golden Rule of personal finance is “pay yourself first.” Because, as we’ve all experienced, if you’re in the habit of paying everyone else first and waiting to pay yourself, there won’t be any money left over at the end of the month.
Another really important rule is to “spend less than you earn.” Without doing this, you’ll never be able to save money. If you’re not currently doing this, you’ll need to figure out how to earn more money, or how to live on less.
The final rule I wanted to highlight is to “don’t run out of money.” Again, fairly obvious in theory, but a very real problem many people face.
To break out of a negative cycle and pattern, we need to put these rules to work in our lives.
Finding financial security
I want you to have financial prosperity. But you’ll never have it until you first have financial security.
When an emergency medical technician shows up on the scene of an accident, they must stabilize the victim. Once stabilized, they can get them the appropriate care.
You need to financially stabilize yourself.
Even if you’re flat broke, you still need to pay attention and monitor your cash flow, your budget, and know your assets and liabilities. A personal financial statement can help you to get started with this.
Here are steps to follow to reach financial security.
Do nothing else until you have $1,000. This will be the beginning of your emergency fund. It should be in an account separate from your everyday checking account.
Next, pay yourself first. If you work for a company that offers a 401(k), enroll in it, even if you’re only contributing 1% of your salary.
Next, get to one month’s worth of expenses saved in your emergency fund.
Once you’ve done that, put a plan together for paying off your credit cards. If you need help, you can access our Get Out of Debt course at no-cost.
From there, get to two months of expenses saved up. Then three. Then four. Then five, and finally six.
When you’ve done that, you’ve given yourself financial security. That’s peace of mind.
And that’s amazing.
The way out and towards financial prosperity
There are 2,604 billionaires in the world, and 55.8% of them are self-made.
Over 80% of millionaires in the United States are first-generation.
Financial success is there for you. You’re worthy and deserving of it.
Before doing anything else, you need to protect your loved ones.
I urge you to buy 10 times your annual income in term life insurance. If you earn $30,000 a year, you should buy a 10 year term policy with a death benefit of $300,000.
If you can’t afford life insurance, you can’t afford to not have it.
Once you get to six months of expenses, it’s time to start saving and investing.
Getting clear on your priorities and goals is essential to this process. You can access our Goals and Values courses at no cost.
Knowing what’s most important to you will help you decide what vehicles you should be saving and investing in.
Consider opening a taxable brokerage account for mid to long-term investing with one of our Partners M1 Finance.
If you’re not enrolled in your company’s 401(k), or they don’t offer one, you can open an IRA at M1 as well. A 401(k) or IRA is a great place to be investing for your long-term priorities like retirement.
This is also a good time to be improving and building your credit. You can access our Improve Your Credit course at no-cost as well.
Conclusion
Focus everything you can on achieving financial security. This won’t be easy, but it’ll be worth it.
Once you get there, then you can get on the path to financial prosperity.
You can break the vicious cycle and start a virtuous cycle for yourself and for your loved one.
If you’d like to connect with one of our Certified Financial Coaches for a no-cost call, you can do so here.
Financial success is available to you. Let us know how we can help.
Additional resources
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
We’ve got three free courses as well: Our Goals Course, Values Course, and our Get Out of Debt course.
Connect with one of our Certified Partners to get any question answered.
Stay up to date by getting our monthly updates.
Check out the LifeBlood podcast.
If you’d like help getting on the same page with your partner, check out our Same $ Page Course.
If you’d like to help your kids get good with money, check out our Teaching Kids about Money course.
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