ESCAPE PLAN: How to Break The Paycheck To Paycheck Cycle

hey guys I've been wanting to make this video for some time today I want to explore the topic of how to manage your finances when things are tight I'm talking here like really tight now this topic applies to so many people because there you might assume that it's it might affect only people who are on low incomes but I've also seen through our work with the humble penny that you know people are struggling even though they're earning a decent income so today I want to just unpack practice basically how I would approach dealing with or managing the emotional aspect of this journey the Practical aspects of almost climbing my way out of the situation to a point where I'm not just struggling now I just want to just reflect on the fact that whenever we're struggling financially it can feel like that is the only place we're going to remain that we can feel like do you know what I'm at this little spot here and everybody else around me seems to be doing very well but I don't seem to move in very much so before I even start this video I just want to start with some encouragement to say that you know what you might just feel like you're here at the bottom and you're kind of like try to climb your way out of your current situation thing I want to tell you right now is that where you're at is a temporary spot things will change for you over time but it requires taking certain steps for that to happen that's what I want to explore for today's video today's video is not one of those where I want you to just watch it like you're watching Netflix I really want you to take some notes if you can get involved I'm going to be doing some illustrations on my little board and just sharing some practical ways that I will go about getting out of this situation if you're loving the sound of that please hit the like button and uh whilst you're there please make sure you hit the button right there and subscribe to the channel for those who are new to our Channel my name is Ken Ken ooro I'm married to Mary and We Run The Humble Penny and financial Joy academy uh you know platform and brand with creat to help you ultimately design a life of financial joy we achiev Financial Independence at the age of 34 including mortgage free in seven years so that gives me uh a great deal of authority to talk about this topic in addition I'm also a Sunday Times bestselling author of our debut book Mary and I wrote this book uh Financial Joy 10we plan to help you banish there grow your money and unlock Financial Freedom I will link to it below and above if you wanted to check it out or learn more uh about what it's about okay I'm going to dive straight in so I've made some notes on my phone uh to help me walk through the various steps today's video I'm going to cover eight different points so do please make sure you hang around and make some notes actually and reflect on the point uh the points I'm going to share today feel free to pause them they're going to be somewhat unusual in part but I'm doing it because I really want to be absolutely real with how I would deal with this as somebody who doesn't just look at life as onedimensional I just don't look at life as you the physical physical Dimension I also look at life in the spiritual Dimension and in fact even more so so here are the ways I would deal with that the first thing I would do when it comes to managing my finances when things are tight is to start with gratitude now gratitude is such an overlooked um superpower in fact often times when we are struggling with our finances we feel that we a lot of times feels like we're fighting fires and we're wanting to deal with the problem at hand immediately but one thing I found really helpful in helping me to navigate challenging times um whether it's financially or non-financially is to begin with what I'm actually grateful for so the question I want to ask you is this what are you grateful for even if you're struggling right now even if you don't know how you're going to pay that next bill even if your business is struggling and you're navigating how to meet the next tax bill or to meet payroll even if your personal life you're trying to figure out how to pay that mortgage or that rent or you're just figuring out how to pay for food there must be stuff that you are actually grateful for in your life so I want to ask you what is that right now pause this video right now if you had to to reflect on it I'll give you some examples I'm super grateful that I've woken up this morning and I can have this dialogue I have this conversation and you might react to it by watching the video the fact that I can I can actually sit here and make this video I'm very grateful for I'm grateful for good health the fact that I've woken up I've been able to exercise this morning I've seen my wife and children and I've been able to do uh help out at home that's something I'm I'm really grateful for I'm grateful for the fact that I have a roof over my head for example and I'm able to wake up in a place that's warm because I'm aware that not everybody everybody's able to do that that I'm very grateful for you you see something really powerful happens when you begin to write down what you're grateful for even before we started to look at the practicalities for how you actually get out of the situation related to your finances so spend the moment write down two or three things that you believe you're grateful for in your life and that would start to create the right foundation for what we're going to do next when it comes to managing your finances the second thing I would do remember I'm doing this from my perspective um that's how I would approach this second thing I would do and this will apply to everybody and that's okay but the second thing I would do is to pray and commit my current circumstances to God now you know I'm a person of faith and I believe very strongly that things that happen in and around my life aren't aren't things that I need to worry about solely by myself yeah so when I think that God's an ultimate provider in my life and in my family's life I have a lot of comfort when I commit things to God and let and put go and and help and uh effectively let God do what God does because there not everything that I can do there's certain things that I can do uh in the physical world by taking certain practical steps which I'll share with you today but when God moves God moves in a very different way God's ways are very different different to the ways that we operate and I understand that you know this is not everybody's cup of tea and that's okay but I will be completely inauthentic if I didn't share this perspective with you so I'm really wanting to share this just to help you understand that there's so much more you can achieve in your life by committing things to God um and letting God do the work as well in that from that spiritual perspective the third thing I would do and this is where we start to get very practical is to be clear on where things are right now and track your income and expenses so I've done a little illustration here that I wanted to show you on this board okay so first of I'll show the board just to show two main things so what we're looking at here is a split of um you know assets and liabilities and I'm also looking at income and expenses usually when we're dealing with problems we don't look at this look at our finances a bit more holistically and we're typically focusing on how do I meet this side how do I pay my expenses only yeah when in actual facts we should be looking at four different areas um how do I navigate liabilities obviously but how do I look at assets and what I have going on for me me as to how could those assets potentially help me to pay off liabilities and potentially pay down uh you know pay expenses yeah but looking at it holistically like this helps you first of all see what you where you're at at the moment so this is your statement of financial position where are you at the moment here I'm looking at all your assets depending on what your assets are are here I'm looking at savings you might own a home you may have some stock Investments and so on I give you a really practical example did you know that there are people right now who are struggling to meet certain things right now but they might have some stock Investments and haven't even checked those Investments to see how well they're performing your Investments might be doing so well that you might be able to sell down and take some profits from those Investments to be able to pay down some liabilities and meet some really painful expenses that you might be struggling with right now but you might not think that way because you've not looked at things holistically as I've tried to do right here also you might look at this and go wow like I'm only earning an income from my salary which is what most people would be doing right now but you might potentially and I'll come to a point later explore alternative ways to increase what's happening here and over time uh be able to earn more to be able to pay down expenses and so on but the point here is simple look at your finances holistically to understand where you're at right now so that you can say well actually I have a sent of my net worth and kind of where I am the key details of my my liabilities and assets and how those might be able to flow into this aspect of helping me to either um you know uh improve my income situation or help me down to help me to pay down some expenses over time okay so that's my third point be clear on where things are right now the fourth point I would focus on is to communicate now this is such an important Point particularly if you're somebody who has a partner for example often times when people are fighting fires when it comes to their finances they don't really communicate and communication is a um takes a back seat but communication extends Beyond a point if you're somebody who's single it also extends to um do you need to communicate with family members do you need to communicate with a supplier of services maybe your gas and electric supplier Broadband supplier um your mortgage provider or your landlord or whatever communicating when things are really tight is very very important it also could lead to you being able to haggle for example exle or try to negotiate better terms on some of your services that you might have already it might even lead to you trying to get better services at a better cost by shopping around but the key would point for is that communication should not be put to the side in fact communication should be seen as an asset as you begin to um work towards a plan of trying to uh navigate your finances given things are really really tight step five is that I would question your lifestyle yeah so my point here is is what small changes do you think you could make in and around your life given that things are currently really tight in your life what changes could you make very practically I use an example right have a scan through your bank statements and try to look for patterns in your habits and behaviors yeah just have a look around are you sporadically ordering takeaways when it suits you do you have too many direct debits that relate to things that you're not really using um are you spending too much in one category or one area of your life potentially driven by a particular lifestyle maybe Led Led by you know um keeping up or you know things you subscribed to you subscribe subscribed even to uh a long time ago but are no longer in line with the values you have for your life for example really really question the lifestyle that you're leading right now you know what are the key expenses in your life is it home is it travel is it school fees for children is it food is it discretionary expenses or unexpected expenses have a scan through your bank statement and You' be S surprised by what you might notice if you look say over the next the last 30 days to 60 days kind of see if you spot any patterns if you're someone who has a partner be good a really good exercise to do this exercise with them just to look through your online banking statements or your fysical statements if you prefer just to see if there are any habits and behaviors that are highlighted by that review and if there is a change to your lifestyle that you might be able to make small changes in lifestyle will make a big difference when it comes to trying to um get by and almost get past this phase of you know struggling when things feel a bit too tight with your finances step six is that I would say here I would use cash as much as possible so here I'm talking about using cash for almost everything that you can use cash for I give you a really practical example um I'm making this video on uh on Monday for example and we went uh Mary was going to go for some grocery shopping yesterday um uh on Sunday you know what we did you know practicing what we preach is we went and um some cash out from the cash machine I got £75 out from the cash machine and she said oh I'm going shopping I'm like oh here bab here's £75 for the weekly shop and you know she took it put it into her her wallet and she went and did her shopping that was brilliant because then you know you don't get to the shop and buy more than your money allows you know you really shop more intentionally you do a meal plan you really follow follow a very clear list that you're shopping towards and you're much more intentional on what you buy why you buy it and where you buy it yeah so that use of cash really really does matter and it plays a much bigger role and I won't go into that in today's video but I wanted to just highlight that there are certain key expenses that if you're really struggling with your finances you can put in place effectively a control by using cash to just make sure that you are staying on top of everything now I've been cleaning my little uh whiteboard here because I want to just illustrate 7 which is that you need to then as you've done the various few things I've shared just now you need to then start to create for yourself a cash flow plan now what is a cash flow plan and how does it differ to a budget for example now cash income and expenses and cash are very different things yeah so cash is inflow and outflow out of your life whereas a budget looks at income and expenses and some of those income and expenses might not be actual income on expenses there might be things that are expected to happen um and some of them um might not have an immediate cash impact whereas when you do a cash flow plan it really speaks to what on Earth is going to be happening in your life uh in the next say four weeks for example so I want just spend a moment and just show you what I mean by drawing a bit of an illustration so hopefully you can see that yeah and you can do this as well if you've got a small business for example and things are a bit difficult at the moment you're trying to figure out how to navigate things getting a bit practical like this really does help let me just give you an illustration these are weeks on top of f so week one week two week three and week four okay I'm going to keep this really simplistic I just want it to make sense yeah let's say that your current bank balance yeah let's say in your in your life right now let's say it's currently I don't know let's say uh say £500 that's your current in fact that should be yeah that's fine I leave that there the current balance is £500 the whole point here is is I want you to try to work towards anticipating what's coming down in week one week 2 week three and week four basically over the next one month what do you expect to happen in your life so you might be that you say I'm going to pay say I'm going to have my my salary will come in and let's say you earn say 2K right that amounts increasing that's now you've now got £22,500 and let's say out of that you pay some rent or mortgage and let's say I'm paying rent of say I don't know 900 right just making this up right and you've got some food expenses for this week and let's say you're spending here £75 and so on yeah and you get the point effectively what I'm trying to do here is help you to anticipate what's coming down the line such that you're able to say right now I've only got 500 p in my bank account but at the end of week one I I expect that by the time I've earned my income and had certain expenses come out I will have a certain amount of um money left over here certain amount left over that amount that's left over is then carried over to begin week two let's say I started week two with I don't know making this up tallied all that up uh 2, uh 2,500 -900 minus let's I started week two with a certain amount of money let's make it up after deducting certain expense let's say 1,5 £500 that have left over you're effectively trying to predict or as realistically as you can try to figure out what are your expectations for different expenses you can do this on a notepad you can do this on Excel or Google Sheets or whatever but the point here is is a lot of times when you're struggling with your finances um a lot of that uncertainty comes from not almost not anticipating what's coming down the line almost not planning for uh certain um expected expected real life expenses you know are actually coming and also leaving a buffer for other things that you might not have expected to come down down the line but when you look at this cash flow plan say over the next four weeks you're able to say well actually I have assessed my current um cash flow situation I know that I'm expecting certain income to come in I know that I'm expecting certain key expenses to go out cuz they go out on the direct debut every month and then I've left certain room for the unexpected to happen by doing this you can say ah by the end of week four I expect to have say I don't know £900 left over or it may even show you that by the end of week four you might be in the red potentially but my key Point here is simple creating a bit of a cash flow plan gives you a sense of being in control of what's going on in your life and this is something that anyone can do you don't need to um be an count or know how to work numbers or anything like that this is me just simply saying use a pen or pencil and paper and simply anticipate what's happening going to happen this week week one next week week two the week after week three the week after that week four have a sense of what's going out and coming in but starting with the current bank balance you've got and that should help you have a picture over what will happen over the next 4 weeks and then when that 4 weeks happens you can then roll that over up into the next uh next four weeks and so on okay then uh the the eighth point I want to make on today's video is to create a plan to make more money now we obviously know and I share this uh talked about this uh you know a lot on this channel it's not about how much you make is about how much you can keep but how much you do make actually does matter because for a lot of people it's not um you know they've really managed their lifestyle to the point where you know they can't cut down the expenses anymore more and they now need to earn some more money to uh help them to move forward so one thing I wanted to talk about when it comes to uh creating uh a plan to make more money is that one of the biggest reasons why a lot of people don't actually take the steps to make more money or um earn more is because they are distracted multiple of multiple upon multiple times every single day may I challenge you you to do two things one is what's the income goal you have like how much more would you like to make realistically like don't like don't forget like all this stuff people share on the internet giving you like um unrealistic uh expectations keep it really real how much do you want to make realistically is it 10% more of your of your current net income is it 20% more of your current net income is it 50% more if you're prepared to do the work how much is it is it500 £1,000 2,000 what is it once you're clear on what the amount is one thing I want to challenge you to do is to put your phone away put your phone away can you create spaces in your life every day where you have your phone untouched for 2 hours a day 3 hours a day untouched you find that the more you create time to just think time to just challenge yourself and say you know what things are really tight right now but I could be doing more with my time I could be using my skills a bit better or I could be learning more to acquire better skills the more you spend that time acquiring a bit more knowledge in a particular area some area of specialism or applying for a part-time job or putting in more hours or whatever the more you do more of that kind of stuff rather than wasting it on things that aren't adding value to your life the more you give yourself the biggest chance to be able to increase your income realistically and realistically speaking you can do it broadly in three areas is by offering a service of some sort using your skill set or ability or by creating some kind of product or selling a product that's somebody uh somebody else already has or it's by exploring creating some content or something of that nature broadly speaking those are three core areas that you could focus on as a way to potentially uh increase your increase your income one thing I would say to increasing your income is that nothing actually happens overnight a lot of us expect super um unrealistic um results we're like oh yeah I want this to happen in the next one month doesn't typically happen that quickly uh being super Frank so if you do have plans to increase your income it's about being consistent in applying your skill set being consistent in learning being consistent in testing things out rather than just saying stuff actually do things actually experiment experiment with things and see where things might lead you to okay then the final bonus Point uh I wanted to make is that you should try not to worry you see um I was reading it's interesting actually I try to find it whilst I'm on the call whilst I'm doing this video right now cuz um I have no plans of editing this video um I was reading last night um a a uh a devotional uh a Bible plan and a message popped up on my phone you know that said said something think that the title of it was something to the effect of you know we're called not to worry but the question is is how do you not worry like practically speaking and it says here I'm reading from my phone here I found a screenshot I took it says yes studies show that about 97% of the things that we worry about have no grounding in reality that will eventually unfold yeah but without a doubt we still worry about things we have a lot of anxiety about things we constantly you know uh thinking about things and worrying about them yeah there's a reason why I started this video by asking you to consider gratitude as the very first step and the Second Step being prayer yeah the reason I've done that is I want us to think of things from this perspective of a faith Walk Two Worlds coming together a faith walk the faith aspect is about that spiritual journey it's about just knowing that you're not on this Journey alone and money is not just a onedimensional thing yes it's a tool but money is also a spiritual thing it's not just a one-dimensional thing the faith Dimension is about connecting to to something bigger than who you are it's about believing that things can happen even though you can't see all the steps just yet whereas the walk aspect of Faith walk the walk aspect it's about then doing practical things taking those steps understanding where you are financially creating a bit of a cash flow plan on a notepad or on a computer uh taking certain steps with shop with cash like I've mentioned on today's video and doing those various other things I've shared today but I've made this video uh just wrapping up to say that um just to remind you to say that where you are right now is not where you will remain for the foreseeable future I think if you remember that one thing it will help to motivate you to to start take to start taking those uh practical steps to gradually move from a place where things seem very tight at the moment and seem really restricted to a point where gradually over time you know if you're really focused if you're really disciplined you can see yourself moving from you know a point where you're really struggling financially but gradually digging yourself out of that Jour out of that place and starting to see this journey of Building Wealth as something that's possible for you guys I really hope you've enjoyed today's video it's very relaxed and I just thought about it whilst I was getting our children ready for school this morning I thought this might be a really good topic to explore if you really enjoyed it I'd really appreciate you uh commenting below um and just sharing your thoughts share any questions you have any things that uh you would love me to expand on potentially or if you have any contributions to make to this video I'd really appreciate your thoughts as well in the comments section and if you enjoy today's video please do share it with other people who you think might find it useful and if you think this video might add value to their lives but other than that thank you guys so much for watching today's video and as always in all things be thankful and seek Joy take care bye for now

Channel: The Humble Penny

Views: 7,250

Keywords: how to stop living paycheck to paycheck, how to stop living paycheck to paycheck 2024, living paycheck to paycheck, stop living paycheck to paycheck, stop living paycheck to paycheck tips, paycheck to paycheck on a six figure salary, paycheck to paycheck living, financial freedom, get out of debt, paycheck to paycheck, personal finance, humble penny, financial joy, financial joy book, Ken Okoroafor, How to Break The Paycheck To Paycheck Cycle, how to make money, debt free, uk

Id: ZTF7M7NPkbU

Length: 26min 16sec (1576 seconds)

Published: Thu May 16 2024