When I was living paycheck to paycheck, I was immediately sick of it.
The unfortunate reality is that roughly half of Americans currently live that way, and imagine they’re also sick of it.
I’m going to share the process that helped me to break free of this vicious cycle. I want you to make the shift from being broke to being good with money.
And here’s the reality; living paycheck to paycheck happens to every kind of person, rich or poor. It doesn’t make you a bad person, it can just be a temporary phase.
More month than money
There are a lot of factors that cause us to spend all the money we earn.
Some are beyond our control, like an illness or death in the family.
Others are self-inflicted, like simply spending too much.
Whatever’s causing you to get to the end of the month and not have any money left, here are the steps to follow to move to a better financial future:
- Shift your thinking
- Who do you want to be?
- Why do you want that?
- Tactical steps for making it happen
Let’s get started.
Shift your thinking
There was a time in your life when you didn’t know how to walk, read or tie your shoes. Now, I’m assuming you can do all of those things.
Personal finance is no different.
You just need to learn how to do it, and you’re perfectly capable of doing it.
The way you think about money is really important. If you think you’re bad with money and you’ll never get ahead financially, you’re going to have a hard time getting ahead financially.
So make a shift in the way you think about money. Let’s look into the future for a moment.
Think about a time, three years from today, when you’re debt-free and saving money every month. How would that feel?
That’s how I want you to start feeling now.
Instead of making a goal to be debt-free and saving money, why not instead adopt the mindset of a person who is financially successful?
Start saying to yourself every morning, “I’m financially successful. I’m good with money.”
Who do you want to be?
Why have a tendency to think about our goals wrong.
We think, “once I’m debt free, then I’ll have peace of mind.”
Instead, let’s figure out how you want to feel, and start living that way now.
Fill in the blank with the way you’re feeling right now: “I am ______ with money.”
Now, who do you want to be?
Fill in the blank with how you want to feel: “I am ______ with money.”
Why do you want that?
Why did you write that? Why did you choose that word?
Perhaps you want to be a good example to others? Maybe you want to have peace of mind so you can stop worrying and stressing over money? Maybe you’d just like to be able to go out to eat more?
Whatever your reason, write it down.
Tactical steps for making it happen
Depending on where you are financially, personal finance can be overwhelming. That’s the opposite of what I want for you.
With that in mind, here is a step-by-step process for getting started;
- Get $1,000 saved in a bank account separate from your everyday checking account. This is enough to cover most minor emergencies like car trouble.
- Start contributing to your 401(k) at work or your IRA, even if it’s $50 a month. The Golden rule of personal finance is to pay yourself first. If you wait till the end of the money to pay yourself, you discover there’s no money left over for you.
- Save one month’s worth of your monthly expenses. You’ve gotta know your monthly expenses, which is an integral part of budgeting. This could take a while, just get started.
- Pay off your credit card debt. Credit card debt can be crushing. You can access our Get Out of Debt course at no-cost.
- Save two months of monthly expenses, then three, then four, then five, then six.
For each of these, put a timeline in place.
- How long will it take you to save $1,000?
- Once you’ve done that, how long will it take you to set up the contribution to your 401(k) or IRA?
- Once you’ve done that, how long will it take you to save one month’s worth of expenses?
- Once you’ve done that, how long will it take you to pay off your credit card debt? (You can access our Get Out of Debt course at no-cost).
- Once you’ve done that, get two months’ worth of expenses saved and repeat that process until you get to six months’ worth of expenses.
This could take a long time.
And it’s important to appreciate, embrace, and commit to however long it will take you.
Here’s the thing; once you’ve completed these steps, you’ll have financial security. You’ll be on budget and you’ll be moving towards that ideal version of yourself and towards financial prosperity.
That’s worth the effort and you’re worth the effort.
Have you ever seen the golf balls and rice experiment? The challenge is to fit a bunch of golf balls and a large amount of rice into the same bowl.
The trick is getting the order right.
If you put the rice in first, there won’t be enough room for the golf balls and many of them will end up rolling away from you on the floor.
The proper order is to put the golf balls in first, and then the rice. You’ve got to put first things first.
The same is also true of our personal budgets. If we’re budgeting out of order, we’ll remain stuck in the paycheck to paycheck cycle.
To continue the golf ball and rice analogy, your needs are the golf balls. Your wants are the rice.
If you’re looking for an easy way to keep track of your personal budget, consider Tiller Money. They make the process easy.
Credit plays a very important role in our lives. It has a hand in dictating where we live, the car we drive, even where we work. Therefore, it’s important to be working towards having good credit.
The first step on the path to good credit is checking your credit report which you can do at sites like FreeCreditReport.com. You’re looking for discrepancies such as debts you’ve already paid off, accounts you didn’t know you had, or names or addresses that aren’t yours.
From there, you’ll start proactively building credit. If you’d like to dig deeper into that, you can access our Improve Your Credit course at no cost.
If you’d like help in clearing up and building your credit, one of our Certified Partners,
Dovly, can help.
Living paycheck to paycheck is no way to live.
You deserve to break free of it. You’re capable of doing it.
If you’d like some additional help, you can connect with one of our Certified Financial Coaches for a no-cost conversation.
Let us know how we can help you on your journey!
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
Improve Your Credit course
Stay up to date by getting our monthly updates.
Check out the LifeBlood podcast.
LifeBlood is supported by our audience. If you purchase through links on our site, we may earn an affiliate commission. Learn more.