How long can you survive without a paycheck from your employer? If you’re constantly on the edge of your seat waiting for payday to arrive, you’re probably living like a majority of Americans who are experiencing the paycheck to paycheck syndrome. Don’t worry – this is your year to change your financial story and live the life you imagined. It’s time to say R.I.P. to living paycheck to paycheck and embrace a world of financial freedom. These 10 tips will help you get started in the right direction.
1. ALWAYS PAY YOURSELF FIRST: If you pay yourself first, you’ll always be ahead of the game. If you pay yourself last, you’ll always be left behind. Change the way you allocate your money and you’ll change how much money you have in your accounts. When you receive your next paycheck, put some money aside in a retirement or savings account and stash some cash away for a rainy day before you pay your bills.
2. UNDERSTAND YOUR NET WORTH: Net worth is not the same as net income. Net income is what you make and net worth is what you keep. Many people live paycheck to paycheck because they focus on the income that flows into their account instead of their overall financial picture. Redirect your attention. Start looking at your assets and liabilities to better understand your net worth and how you can use your net income to positively impact your financial position.
3. DON’T GIVE UP YOUR GOODS SO EASILY: Don’t give people the power to take your money from you so fast. Whenever you walk into a store or think about giving up your dollars, evaluate your decision. Do you really need it? How will the purchase impact your net worth? Does the item reflect something that is important to you in your life? Think before you buy. Most impromptu purchases quickly decrease your net worth while making someone else’s pockets fatter. Is the purchase really worth it?
4. NEVER DEPEND ON ONE SOURCE OF INCOME: If you’re depending on one source of income to meet your daily needs, then you are only one paycheck away from a financial disaster. Diversify your income. Position yourself to have a portfolio and passive income in addition to your earned income. The more streams of income you have, the more freedom and flexibility you will create in your life. You’ll never have to depend on one paycheck ever again.
5. LEARN HOW TO USE YOUR PAYCHECK TO INVEST: People who never learn how to invest will always have to work twice as hard for half as much. You shouldn’t have to work hard for every penny that flows into your account. Learn how to multiply your money by becoming an investor. There are so many ways to invest your money. If you’re looking for a simple way to increase your streams of income as an investor, consider dividend investing. You’ll earn money every month or quarter just by investing in high-quality dividend stocks. You can earn dividends while you sleep and build a dividend portfolio that allows you to pay your bills and travel around the world.
6. UPGRADE YOUR SAVINGS STRATEGY: If you find it difficult to save money, you need to leverage technology to make the process easier for you. You can schedule recurring transfers from your checking account to an online savings account to help you build your savings. Using an online account reduces the temptation to immediately withdraw funds when an “emergency” arises. Start by scheduling weekly transfers of $10, $20, $25 and increase the amounts every quarter. If you commit to automating your savings strategy, you’ll be able to easily save $1,000 within a year.
7. TRACK YOUR CHANGE: Don’t take any of your pennies for granted. You should be so focused on your money that you know where every penny goes. You can either pull out the almighty excel spreadsheet to track your spending patterns or you can download a personal finance app that will record your change for you and show you where the majority of your money goes.
8. STOP TRYING TO LIVE LIKE YOU’RE RICH: You’ve probably heard this a thousand times but it’s important to live below your means if you want to get out of the paycheck to paycheck trap. Unfortunately, living below your means can be a foreign concept if you were taught to constantly “treat yourself”. Reward yourself when your financial foundation is taken care of, not when you’re trying to escape financial misery. Always remember that having money in your account does not mean that you can afford whatever it is you want.
9. USE YOUR PAYCHECK TO BUILD YOUR FREEDOM FUND: Similar to an emergency fund, a freedom fund gives you the cushion to never feel stuck or disrespected in your career. You’ll never have to work a job out of desperation. You’ll be able to work jobs that give you a sense of dignity and allow you to bring your gifts to the table. Build your freedom fund with enough money that allows you to sleep peacefully at night and live in harmony. Contribute to this account as often as you can so that you can have enough money to thrive in moments of uncertainty or transformation.
10. WORK WITH A COACH: You go to a doctor when you’re sick, right? You seek out the best lawyers when you have legal troubles, right? Why not seek out a financial coach to help you get your money right? The best financial coaches help you to see where you are and where you need to go so that you can make the necessary changes to achieve your goals. Isn’t your financial freedom worth it?
Charlene Rhinehart is the Best Selling Author of “How to Find Happiness Again” and “Dividends Are a Queen’s Best Friend” available on Amazon. She’s a Health & Lifestyle writer, former fitness instructor, and brand ambassador who helps others invest in their dream life. Charlene is the Founder of Wealthy Women Daily, Career Goddess Academy and Black Couple Travels.
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