You just got paid but there are more bills than your paycheck can cover- again.
Have you been there?
It’s living paycheck to paycheck and you feel frustrated at times feeling you have no control over your money. You dread payday because that sinking feeling in your stomach reminds you that you won’t have any money leftover before your next paycheck!
You want to do more for your kids or travel and save up more money but something always seems to come up and you’re back to no savings. If only you could make more money, you think.
Things are going well. You get a raise or start a side hustle, but before you know it you’re back to scraping paycheck to paycheck. How did this happen?
You’re making more money so how could I still be coming up short!
The size of your paycheck has changed but your money mentality has not. And there’s a good chance the size of your bills has changed too.
You’re not alone.
In a 2017 survey, Careerbuilder found that 78% of US Workers live paycheck to paycheck. What’s even more startling nearly 1 in 10 US Workers that make $100,000+ live paycheck to paycheck.
We know the feeling! My husband and I have always been very hardworking, have always made good money and eventually started making six figures (woohoo!) but at times, we were living paycheck to paycheck! We were on the paycheck to paycheck roller coaster and had to get off!
Changing our money mentality was critical in order to get on the road to Financial Freedom and start getting out of debt.
We renovated our house in 6 months and sold it in a little over a month! We were able to start paying off the debt, started a commercial cleaning business and started this blog. We got on Our Freedom Road!
If you haven’t downloaded the Financial Freedom Checklist, with the steps to get started on your Freedom Journey, go there now.
Paycheck to Paycheck Mentality
A person that lives paycheck to paycheck would be unable to meet their financial obligations if they lost their job due to limited or no savings. They are at greater risk of experiencing major financial problems if they became unemployed versus someone that has money saved.
These are some more habits that might be common with living paycheck to paycheck:
- Little or no savings
- Try to save but end up spending it before next paycheck
- Don’t expect to have enough leftover to save
- Frequently don’t know where the money goes
- Are sometimes surprised with the balance in their account (ouch!)
- Blame other people (like your spouse?), circumstances (economy?) or things (bank fees!) for their financial issues
- Don’t keep track of their spending
- Frequently have overdrawn back accounts
- Frequently have to borrow money from family, friends or check cashing services
- Use credit cards until payday
- Don’t use a budget
- Don’t have a side hustle
- Have lots of debt
- Don’t have debt repayment plan
- Don’t have an investment plan
- Don’t have a Financial Freedom Road Map
If you can relate to any of these you are in the right place!The good news is a paycheck to paycheck mentality CAN BE CHANGED. Hopefully you can take a deep breath 🙂 There are steps you can take right now to renew your money mentality so you can stop living paycheck to paycheck.
Why do so many people struggle living paycheck to paycheck?
Fundamentally our beliefs become our expectations and our expectations, whether they are conscious or subconscious become our reality- it’s cause and effect. What you believe and expect shows up in your life.
Most people don’t learn at a young age that our beliefs and what we focus on becomes our life. We also don’t learn how to manage money and least of all that we have an inherent right to Financial Freedom. We create our lives by default and end up frustrated, feeling hopeless and broke!
Most of what we learn we mimic from our parents, family members or mentors. High schools could make such an impact on kids’ lives by teaching them how to save, budget and earn money.
We learned growing up that money was for paying bills. So we’d save but then something would come up and we’d end up spending it. Or as soon as we’d save a certain amount, we’d be itching to spend it.
As we started to develop our money mentality, we began learning money is a tool that we use to experience Financial Freedom so we can take excellent care of our families, bless the needy, fulfill our purpose, invest, surround yourself with beauty, travel and explore this beautiful earth of ours and pursue hobbies to live the fullest life possible.
As our money mentality evolved, things got better fast! We learned how to establish a plan for money management. We setup a Financial Freedom Road Map, we learned how to manage our finances better, how to begin saving more, how to pay off more debt and how to make more money. It’s changing every aspect of our lives and we feel more free now than we ever have!
[x] Steps to Stop Living Paycheck to Paycheck
We were very aggressive about wanting to experience Financial Freedom and these steps worked for us. Everyone’s journey is different and there are a million ways to get to your destination- so don’t worry. You just have to find what works for you.
The major key to breaking out of the paycheck to paycheck mentality is to spend a lot of time focusing on the things you want versus the things you don’t want.
For most people, the issue is they don’t know what they want or they know what they want but they don’t spend any time focusing on it. So let’s start putting together a vision of a life where you a free from money worries.
Step 1: Develop your Financial Freedom Vision
Think about what kind of life you want. What would make you feel free?
- How much money would you need to cover all of your expenses and have enough to put in your savings every month?
- How much money would you need in the bank so that if you stopped working tomorrow you would be fine for the rest of your life?
- What are your cash flow sources? Passive income? Real estate investments? Online business? Stocks?
- How much would you like to save every month?
- How would you feel if your savings account was growing every month?
- How much would your monthly expenses be if all of your debts were paid (including your house)?
- Check out out the Beginners Guide to Financial Freedom
- One of the best apps I know for helping you change your money mentality is the Secret to Money App . I love this app! It has daily inspirations and affirmations, a way to keep to track of the manifested money that comes to you as your money mentality is renewed, a way to track your desires, and it even delivers a check to you every day that you can make imaginary purchases with.
- Action: Download your Free Financial Freedom Vision Workbook!
- Print this list out and carry it with you every day. Read it 3x per day.
Day to Day Mental Maintenance
- Continue to manage your money as usual. Don’t put any pressure on yourself at this point. If you run out of money before your next paycheck – no worries- gently remind yourself “This is just temporary. My money mentality is improving every day and I am a Wise Money Manager.”
- If you get a worry thought that reminds you of your current financial situation or any thought that doesn’t line up with your Financial Freedom Vision just use it as a reminder to review your Financial Freedom Vision List. Trust me, these thoughts will become less and less frequent.
Emotions and Paying Bills
- Before you sit down to pay bills it’s very important you are feeling good and not frustrated or feeling stressed. Go through your Financial Freedom Vision or write in your Journal (we discuss this below) until you feel grateful for having the money to pay your bills. THIS IS VERY IMPORTANT.
- Do the above exercises for 30 days consistently
- Action: For the next 30 days review your Financial Freedom Vision 3x a day, keep your thoughts in check
Step 2: Start a Financial Freedom Journal
So many amazing results continue to come out of our journaling experience. It helped us visualize the life we wanted by helping s daily change our relationship with money and helped us figure out what we wanted. It was also a gratitude journal where we liked to list our blessings and how we’ve been able to bless our family.
We began tracking how much we saved after cutting costs. It was exciting to see that number continue to go up. We were able to find side hustles we were used to pay down our debt. It also helped us develop our Financial Freedom Roadmap.
- This is a very powerful daily exercises. Money is a tool you use to express yourself, enjoy life and help others but you have to intentionally spend time thinking about those things in order to bring them into your life. the more you do this, the more open you become to all of the good things that are on their way to you. Gratitude positions you for receiving and aligns you with abundance in the most amazing way.
- Think about all of the good things that can be accomplished through the right use of money. You can set yourself free from debt, donate into a scholarship fund, buy a drinking well for a village, sponsor a child in an undeveloped nation, buy an extravagant Hawaiian vacation for loved ones, treat your parents or siblings for anniversaries or special events, pay cash for cars or homes or pay your insurance in one lump sum. Your imagination is the limit.
- Action: write in it every morning and keep track of your goals, savings, milestones and ideas you get
Step 3: Setup a Routine
Commit to following these steps daily and you’ll begin to experience an ease when dealing with money. The negative emotions associated with scarcity and lack will be replaced by the positive feelings associated with abundance when when you review your vision and write in your journal. Though these actions seem very simple you are powerfully rewiring your brain and opening yourself up to receive abundance.
Step 4: Take Inventory
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The more you stick to our daily routine, the better you will start to feel. After a few days you may start feeling excitement about your financial situation and not as stressed. This means your money mentality is shifting!
Now it’s time to start taking inventory of your money.
- Take inventory of all of your accounts: personal loans, unsecured credit cards, mortgage, 401k loans, auto loan(s),
- Write down the balances, interest rates, monthly interest charges, monthly payments, due dates, account numbers and customer service contact info
- You can use a spreadsheet or an app. We use undebt.it and Mint.
- Action: take inventory of all of your debt
Step 5: Begin Tracking
- This is where we build up more momentum. There are many great tools you can use to track your bills. We use Mint to track our expenses and set budgets.
- This step will help you understand your spending patterns so you can improve them.
- Action: Track your spending for 30 days.
Step 6: Cutting Costs
- You’ve seen where your money is going. Now look at where you can cut back so you can save more.
- Can you cut back on eating out? Are there any subscriptions or memberships you can cancel? (Audible, Netflix, iTunes that’s $45 right there!) Look for cheaper auto insurance rates. I saved $140 per month by switching from Progressive to Geico. Switch to a free checking and savings account.
- Action: look at ways to cut costs and add to your savings account
- This is how we were able to save $5523 per year!
- Switched from Progressive to Geico and saved $140 per month = $1680
- Cancelled Amazon Prime $6 per month = $72 annually
- Cancelled shopify $29 per month = $348 annually
- Decided not to renew our Disney annual passes $160 per mo = $2080 annually
- Cancelled Audible $15 per month = $180 annually
- Closed a savings account with a $14 maintenance fee = $168 annually
- Cancelled Canva $12.95 per month = $155 annually
- LA Fitness $70 per month = $840 annually
- Medium.com membership $5 per month = $60 annually
- Grand Total: $5523 <<<—-Wow this was mind blowing!!!
- Action: Look for ways to cut costs and save money. They are there, you just have to look!
Step 7: Organize your Money
You should be able to recover some savings as you start cutting costs. Next step is to give your money a purpose and organize it. Don’t worry if you don’t have much or anything to put into each account at first- this will change over time as well. Just beginning this step is putting a positive money momentum in motion for you. As you get paid you will strategically distribute your money into these accounts:
ME Account 10% of your income
First off, make the first deposit into your ME account. This account is not for bills. It’s for you to spend on yourself each month. You can use it for personal needs, entertainment or whatever you want guilt-free.
GIVING Account 10% of your income
Give this money to charitable organizations, your church, those less fortunate, or family member in need. Use this money to add value into people’s lives. The goal is as your income grows so will your giving.
EXPENSES Account 50% or less of your income
The Expenses account will have enough to cover all of your expenses and necessities.
FINANCIAL FREEDOM Account 15% of your income
The goal of this account is to continue to grow until it can cover your expenses and cost of living for the rest of your life so that work is optional. Once you determine what your expenses are, your next saving milestone is to save one month’s worth of expenses.
STOREHOUSE Account – short and long term savings 15%
As you get paid, your first goal will be to save $100 or more in your Storehouse account each month- (you can still keep the first $100 in your sock drawer :-).
The second short term goal is to save $1000 in your Storehouse account before you start depositing money into any of the other accounts except the ME account. This $1000 is for any expenses not budgeted in your monthly expenses. After you make the withdrawal you must pay yourself back.
Once you have the $1000 saved, you can begin to start saving long term for things you’d like such as vacations, appliances, medical expenses, home purchase or educational expenses.
Note: If you can’t do the % yet – it’s ok – just deposit an amount you feel good about but be consistent. **If you don’t make enough to deposit anything in this account, it’s time to start a side hustle!**
- Action: Setup your bank accounts
Step 8: Start saving- baby steps
- After the 30 days you should start to feel better about money and experience less frustration when you pay bills.
- Your next goal is to save up $100, withdraw it from the bank and keep it in a safe place in your home. If you have to let someone you trust hold it for you so you won’t spend it, go right ahead. Do whatever you need to do to save the money.
- Congratulations! You are becoming a Wise Money Manager! If you have $100 saved that officially means you are not living paycheck to paycheck.
- Action: Save up and withdraw $100 and store it in a safe place. Your next milestone is to keep saving until you get to $1000.
Step 9: Make More Money
- If you aren’t able to deposit the % listed for each account then the solution is to start making more money! That’s what we did by selling our house, starting a commercial cleaning business and starting this blog.
- Check out our Pinterest page which is loaded with tons of money making ideas.
- Mental check-in: When your mind wanders and yearns for that next paycheck, and wants to feel that mental security blanket, break that stream of thinking and say “I don’t need to wait for my next paycheck to have money. I have the power to generate money whenever I want.” Then start thinking about how you can make more money in between paychecks. Even if it’s a garage sale or selling your items online. Find a way.
- Start a side hustle! Check out Michelle from Making Sense of Cents’ list of over 75 Ways to Make Money
- Action: start a side hustle asap!
Step 10: Pay Off Debt
The Last Thing You Need to Know to Stop Living Paycheck to Paycheck
- Living paycheck to paycheck can be frustrating but unfortunately it’s very common for most people. This way of life is very far from the vision of how we were created to live. If you follow these steps and make a consistent effort to change how you think about money everything else will fall into place. There’s hope!
- What money habits did you learn growing up? What are your greatest struggles? What tips can you share that have helped you experience success financially?
- 5 Easy Ways to know you’re on track for Financial Freedom
- 15 Reasons Why You Should Get Out of Debt Fast
- 10 Steps to Stop Living Paycheck to Paycheck
- The Beginner’s Guide to Financial Freedom