Living paycheck to paycheck is a harsh reality that many families face in America. It isn’t ideal, but it is REAL. I didn’t want to tackle this post from a holier than thou perspective, because trust me … we’ve been there. So I wanted to share some things we did to stop that dangerous cycle and really start positioning ourselves to build true wealth.
Create a budget
“Create a budget” may seem like a simple statement, but it is the first step in really understanding where your money goes. You can have a general idea of how your money is spent, but until you start combing through your monthly bank statements to see exactly how much is spent in each area of your life, you won’t be able to get ahead. So how do you create a budget? My husband has an amazing podcast episode on this, so I am going to recap a bit of it below but I highly recommend tuning in!
How To Create A Budget:
List out ALL of your monthly expenses.
- If you aren’t sure where you are spending your money, as I mentioned earlier, use your bank statements as a guide. For my family, the number one thing that works for us is knowing exactly where all of our money is being spent. I was notorious for spending beyond the budget every single month and it wasn’t until my husband and I both got on the same page with where we want to land financially that I realized I needed to change my behavior for our system to work. It also finally dawned on me that if I want to be a multi-millionaire, it isn’t just going to happen, I have to do the work.
Calculate how much money you bring in each month
- Knowing how much money you bring in each month is equally as important knowing what your monthly expenses are. If you are spending more than you make, you will NEVER get ahead. Ever. One thing I should note also is that we do not factor in side hustle money into our monthly expenses/budget. Our budget is built solely on what we make from our 9-5 jobs, anything extra is just that … extra and we use it on our other investments.
Create a spreadsheet/monthly budget document
- A budget is essentially a monthly plan and commitment to being responsible with your finances. You don’t need any fancy tools to build this document. We use Google sheets! If you’d like an example of our budget, you can send a request here.
4. Within your budget, create a savings plan
- Every time we get paid from our 9-5 jobs, we move money around according to our budget. One of the most important moves we make is to our savings accounts. We have a few different accounts. I’ll share below our most used, but of course do what works for you and your family.
- 6+ Month Emergency Fund Savings – If one of us loses our job, we have our salaries saved and invested in a high yield savings account that generates a % return each month. So even though our money is sitting for a rainy day, it is still making money for us. Please note: this took TIME and PLANNING to save and build this fund. Calculate your income and how long it will realistically take you to save this amount of money. Once you have that information, start saving. Be sure to research where you can get the money for your money.
- Regular Savings – Just your basic savings account that we keep on hand for miscellaneous needs. We allocate a specific dollar amount per paycheck here.
- Crypto Savings – We also have money allocated in stable coins within crypto (check out my husband’s podcast if you aren’t sure what that is, it is way too much to dig into on this post!)
Being able to save any amount of money requires discipline. Even if you start out very small, you have to start. It could be $10/day to replace eating out for lunch at work. Or $1000/per month because you noticed you have the ability to save that after working the numbers and planning your finances.
Identify where and how much you can save and get started. It will be a total game changer for your finances. When I went to get work done on my car a couple weeks ago, it cost us over $1500 and because we always save, it wasn’t a big deal. I swiped my debit card and kept it moving. Years ago, that would have thrown us off financially.
I’m thinking about doing a $1000 challenge in an upcoming post where any one interested in participating will commit to saving $1000 in 30 days. More details to come.
Once you’ve created your budget and you are on track to start being more financially responsible, it’s time to tackle debt. We have opted to tackle it head on and completely eliminate it. It’s frustrating. It’s humbling. It’s uncomfortable. But it is so very necessary.
Debt is crippling and will force you to never be able to get ahead. Once you have a handle on how much money you spend each month, you should also have a pretty good understanding of how much of that money is going to debt. Whether it is a car, credit card, student loan, etc … you have to build the payoff plan into your monthly budget. I know that sometimes it is easier to ignore it. Yolo, right?! I used to do the same thing. I’d swipe my credit card, run it up beyond what I could afford and then be stuck. But it was a cycle that I honestly got tired of repeating.
I am debt free as of 1.5 years ago and it is an extremely freeing feeling to not owe anyone any money (except for our houses).
Think about your financial goals and ask yourself if how you are spending your money is in line with them. Are you disciplined and on track? Or are you spending to try and look like you have more money than you actually do? Jason always tells me “we’re broke, you can’t afford that” LOL … it used to deeply offend me because I KNOW that we are far from broke, but his point is that we aren’t where we want to be yet, so don’t let up or get comfortable. I was watching stories the other day and one of my favorite bloggers, Courtney (@greeneyesgoldsoul) said if you aren’t rich, you’re broke! She sounded so much like my husband in that moment, but I knew exactly what she meant. Don’t get caught up in the now and forget to set up a solid financial future.
My dad also once said “the funny thing about debt is the only person that can see it is you.” That stuck with me because it is so true and it reminds me constantly to make sure that I can look myself in the mirror and feel good about the habits I am creating. Looking wealthy vs. actually having wealth – it’s powerful thing to overcome.
Make More Money
For this point, I’m going to direct you to The Six Figure Side Hustle, a post I wrote that discusses the importance of having multiple streams of income. It’s actually beyond important, it is CRITICAL to have multiple income streams in this day and age. Outside of loving my job, it is the reason I laugh when people ask me when I’m going to quit my job and blog full-time … child, NEVER! I’m collecting all my coins, and you should too. And if the day comes when I don’t need to work for the man anymore, I’ll still be working on something else. Make sure you have a read.
- Have an honest debt to income evaluation with yourself
- Create a budget that you can stick to
- Eliminate debt
- Commit to creating an additional income stream this year
My husband’s podcast is an excellent wealth resource. It is called “The Good Samaritan Podcast” because he truly loves sharing this type of information. Be sure to check it out and have a listen!
Thank you so much for reading today’s wealth post. I added a tab to the menu bar where you can read each week’s post. I hope that you find these helpful! Tell a friend and meet me back here next Wednesday for another discussion.
XO – Steph