According to Forbes, as of 2019, 78% of Americans are living paycheck-to-paycheck. That means that if they lost their income for a month that they would be in trouble. If they lost their income for several months (whether due to job loss or injury), if they don’t have disability insurance, they could be at risk of getting their electric or water turned off, having their car be repossessed, or even having their home foreclosed on.
How can you set yourself up to avoid these scenarios? First, get your expenses under control. Second, make sure you earn more than you spend and bank/invest the rest. Third, take care of yourself mentally and physically by eating the right foods and exercising regularly. And lastly, be helpful to the company that you work for. If you earn the company more money than they’re paying you, they would be smart to keep you.
For today, let’s focus on the first two items listed above, as they are easier to connect the dots to our financial success…
If you live by the principles of paying yourself first (always setting aside money to invest/save before anything else) and living below your means (no, you can’t always get what you want), you will be able to amass wealth and eventually stop living paycheck-to-paycheck.
The truth is that you can probably make due with what you are currently earning. Most people live paycheck-to-paycheck not because they don’t earn enough, but usually, it’s because they are not disciplined with their spending habits. Don’t make excuses that you can’t do “x” (get out of debt, build an emergency fund, or invest for the future) because you don’t earn enough. Get rid of that victim mindset. If you really aren’t earning enough, then do something about it. Ask for a raise and then show why you’ve earned it. Learn a new skill that will improve your job performance. Pick up overtime hours, a second job, or start a side hustle for extra cash. And if none of those work, you can always your profession.
The bottom line is that you should know what your monthly income is and you should have a good idea of what your monthly expenses are. Use those numbers, then live a disciplined lifestyle to save the difference for an emergency. Because life happens to us. Emergencies will come, so when they do, you’ll be prepared. If you have money saved up and aren’t living paycheck-to-paycheck, you won’t feel as much stress (compared to if you had no emergency fund) and can make a better decision when under duress.
One of the keys to being able to build wealth is by NOT thinking like everyone else. Get off of social media, don’t watch tv, and stop going to the store unnecessarily. It’s ok to not have certain luxuries. As Dave Ramsey says, “live like no one else (now) so that later you can live and give like no one else.” If you choose to “sacrifice” a little now, to be different, to be “weird,” it will pay off in the future. Don’t be afraid to be different. Don’t be afraid to live your life in a way that others aren’t willing to. Make decisions based on what you feel is right, instead of doing what you think everyone else is doing/will approve of. You will be better for it in the long run.
