How To STOP Living Paycheck to Paycheck

hey everybody welcome back to whiteboard finance my name is Marco and I'm here to help you master your money and build your wealth today we're talking about how to stop living paycheck to paycheck and if you get any value out of this video please share it with one friend and hit the like button I would really appreciate it so if you spent any time on any financial sites or if you spent any time on LinkedIn you're always gonna see about once a month how Americans are living paycheck to paycheck and how many more Americans every year are living paycheck to paycheck so I did a little bit of research for some background info on this video so I can speak intelligently on this topic and what I found is actually this survey from 2017 from careerbuilder.com as you can see from the screenshot here at careerbuilder.com surveyed 3,500 full-time workers and you can see the stats they're pretty staggering so let's jump through these real quick because it is relevant to the point of this video 78 percent are living paycheck to paycheck one in 10 are actually living paycheck to paycheck that make $100,000 or more per year more than one in four or 25% do not set aside savings each month three and four say that they're in debt and half of those three out of four think that they will always be in debt forever 27 percent of workers making fifty thousand to ninety nine thousand nine hundred and ninety nine dollars live paycheck to paycheck and 70 percent of those 27 percent are in debt that's like your typical middle-class right there that's a very important bullet point 32 percent of these 3,500 people surveyed do use a budget wedge which I actually think is pretty high in my opinion that's almost one out of three people and then 56 percent save a hundred dollars or less a month which is pretty bad so with those stats preface in this video I do want to get into the very first part of stop living paycheck to paycheck and how to stop living paycheck to paycheck so what I'm gonna do is I'm gonna draw a pyramid here and there's a reason why I'm drawing a pyramid and not necessarily four equal blocks there will be four parts to this video or four steps if you will so with every big building the in my opinion is the most important and this is step number one okay so for step number one I want you to take 100% responsibility for the financial situation that you're in so most people just like someone trying to start a diet they are in the situation that they're in because of the choices and the decisions they've made yes there's medical issues yes that you can have a spouse spending money you can have go through layoffs there can be you know the blaming the government for high taxes whatever it doesn't matter because at the end of the day you can only control what you can control so you need to be all in on this financial diet so you can stop living paycheck to paycheck so most of the people watching this video they're here for a reason or they're here just because they like my content which I appreciate but most people that are searching for diets or financial diets or stop living paycheck to paycheck they're not here because they have six-pack abs and they can do 25 pull-ups in a row and they have 5% body fat they're here because they want to fix that the situation that they're in so number 1 is going to be responsibility okay so until you fully buy into your situation or buy into the plan you're never gonna succeed so basically you need to stop making excuses and own it so that's why that's the base of the pyramid but most importantly the most important part of this first step is finding your why so why do you want to stop living paycheck to paycheck and I'm gonna go into more details in that later in the video so the second part of this pyramid is actually going to be your planning okay and this is going to be the bulk of the point of this video or the budget okay because this is actually the hardest part this is implementing the diet so if you want to use the diet as the analogy this is kind of understanding your calories in versus calories out okay so ultimately to be able to plan you need to take a step back and look at your big picture okay so you need to know your money coming in which is your income versus your money going out and if you have a spouse or significant other and kids you need to look at this as a macro perspective and look at from what's my wife's income what's my wife's spending what's my income what's my spending you need to turn this into a universal household budget so ultimately what you need to start with is understanding your needs this is literally the basic necessities for life so shelter electricity water food and I'm not talking about eating out I'm talking about literally groceries for sustenance for literally being alive okay water drinks things like that so once you understand all of your needs you can see what's left over and that's what you can contribute to all of your debts if you have any so a lot of people live paycheck to paycheck because they have ongoing debts instead of being debt free and these debts eat away at your universal budget okay or your Universal income so once you pay off you know the car the housing you know stuff like that things that absolutely need to be paid off then you can see take it a step further and see what you have in terms of what's left over for my wants these are the things like buying a video game or going to the movies or going out to eat you know the things that are spent on hobbies and things like that so if you have anything left over at that point that money needs to be automatically going towards paying off the debts and killing that extra fat if you want to use the analogy of you know the diet if you don't have enough money to actually have anything left over after all your needs debts and wants or met then you need to trim back you're eating or the spending on the wants category these are things that you that you want and not need so you can actually contribute a little bit more back towards knocking out the debt once you knock out the debt you can increase your spending a little bit if you want or you can contribute that to eating up the rest of the debt until your debt free okay so if you don't have enough money going towards your wants figure out how to knock out the debt first and that way you can actually contribute a little bit more to the things that you want so once you pay off the debt you need to keep it off because that way you can set yourself up for step number three which in my opinion is the biggest killer of wealth and the reason why people stay in the paycheck-to-paycheck category and this is our friend lifestyle inflation okay sorry my pen is actually starting to die here so ultimately lifestyle inflation is one of the biggest killers of wealth so this is kind of like the keeping up with the Joneses making sure that I Drive the nice car that's in my driveway so people think I'm successful you know overall it's just human nature to want to keep up with your lifestyle and keep increasing your lifestyle so you need to know when to stop so with the diet maybe you can have one cheat day a week where you can go out eat pizza drink beer do whatever you want eat the burgers and all that but for the other six you need to stay humble and actually not inflate your diet or your lifestyle in this case so it's kind of like human nature right if you drive a Toyota and you start making significantly more money you want to drive the BMW when you do when you're sick of the BMW you want to start driving the Porsche the Porsche leads to the Ferrari that you're sick of the Ferrari leads to the Lamborghini and so on and so on so here's an interesting stat about lifestyle inflation and there's a reason why I'm talking about all this to get us to the fourth step so basically if you remember earlier in this video one out of ten people that make $100,000 a year live paycheck to paycheck there's also a very cool article on financial samurai that talks about how people making half a million dollars a year can easily fall into the paycheck to paycheck lifestyle and I'll send a link to that article in the description below so basically the reason I'm talking about lifestyle inflation is because it doesn't really matter how much money you make you can always succumb to it even if you look at like professional athletes and things like that they say a lot of the times ends up end up being broke okay so this lifestyle inflation step is setting you up for this right here and there's a reason why I did this and that is increasing your income okay so there's a reason for this when you increase your income you're able to handle it if you've built the solid foundation to get to this point okay if you how do I say this if you're a lottery winner actually looked up these stats one out of three big lottery winners actually ends up filing bankruptcy at some point in their lives says 33 percent why do you think that is it's because they never built up this foundation to actually handle that big sum of money okay so now that you've built up the foundation of being responsible owning your financial situation planning and budgeting calories in versus calories out lifestyle inflation not succumbing to that Toyota to BMW to Porsche the Ferrari kind of an example in the McMansion if you want to call it that and then you can actually handle your increased income so increased income doesn't need to be anything extravagant you don't need to win the lottery it just helps you go from being short-sighted in like how am I gonna pay for groceries this week versus farsighted or looking at the big picture in your financial plan so you can now plan for the future you can plan for college you can plan for retirement you can be philanthropic if you want you can give money away it just helps you become an overall better person so what are some ways to go from your w2 job to actually increasing that you can increase your credibility with different certificates you can increase your education you can start a side business you can teach on YouTube you can do pretty much of anything to increase your income it just takes you a little bit of time and effort upfront to realize those increases over time so a perfect example my wife right now is a full-time registered nurse in the Midwest they make decent middle-class money however she is studying to be a nurse practitioner it's gonna dedicate a year and a half or two years of her life and a couple of tests and you know a lot of hard work but ultimately when she becomes a nurse practitioner it will most likely double her income so that'll take us from you know middle class to like maybe a pre middle class I don't know if that's what you want to consider it but my point is is that she's sacrificing about two years of her life with a lot of hard work because she's still working full time but ultimately she'll see that increased salary four years after she completes that program so that's just a small example ultimately my final point on this video is that once you master this peer and once you actually understand how money works and it's almost just like a diet it's almost like anything else in life it's so easy to do especially once you get step number two down so own it plan for it don't increase your lifestyle increase your income when possible and when feasible and I guarantee you you will set yourself up for financial future for a positive financial future and also you will stop living paycheck to paycheck I know this video was a little bit more philosophical and a little bit more rambling if you will but if you got anything out of this video please share it with one friend hit the like button and subscribe below if you haven't already thank you so much and as always have a prosperous day [Music]

Channel: Marko - WhiteBoard Finance

Views: 39,325

Rating: 4.9460769 out of 5

Keywords: how to stop living paycheck to paycheck, living paycheck to paycheck, stop living paycheck to paycheck, stop living paycheck to paycheck tips, how to save money when you live paycheck to paycheck, paycheck to paycheck

Id: NSpMFtcXxcc

Length: 11min 57sec (717 seconds)

Published: Mon Jul 22 2019