The reason for this is that, if আপনি are spending your entire paycheque every pay period and a financial emergency happens to come up, how are আপনি going to pay for it? The answer is usually ‘credit card’ and, as we know, using credit cards to pay for things আপনি can’t afford is often one of the first steps towards debt accumulation. At Cambridge Life Solutions, after we have helped our clients eliminate their debt, we encourage them to establish a system that will prevent them from ending up in the same position a few years down the line. In order to achieve this, it’s important to get away from paycheque-to-paycheque living – here’s how.
It’s actually incredibly easy to end up living paycheque-to-paycheque – most people have done this at some point. For much of my late teens and early 20s, this is exactly what I did. I’d take care of my necessary expenses, such as rent, groceries, bills, travel, etc, and the rest of the money was mine to burn. It’s actually still hard not to do this; saving is something I have to automate in order to keep myself on track. From what I’ve read on ফোরাম and message boards online, many people are the same way – after all, we work so we can play and saving money is basically just আরো work, right? (A friend of mine really did say this to me a couple of years ago). Well, what my friend failed to acknowledge is that we primarily work so we can survive – play comes second. Accumulating wealth is necessary to survival for two main reasons; firstly, we won’t be able to work forever.
Think of that old fable of the lazy মাউস and the industrious মাউস – the industrious মাউস worked all summer, setting berries and nuts aside so he would have a stash of খাবার during the winter, when he would be unable to simply live day-to-day. The lazy মাউস didn’t worry about the future and, instead, just gorged himself on what he could find; spending the rest of his time just having fun. But when winter rolled around, the lazy মাউস was in big trouble and the industrious মাউস was doing just fine. When our ‘winter’ rolls around (i.e retirement), wealth won’t be anywhere near as easy to accumulate. It makes আরো sense to live like the industrious মাউস and prepare for the future, rather than be in deep trouble because we couldn’t see past the present.
The সেকেন্ড reason accumulating wealth is necessary to survival (in a long-term sense) is because life is not predictable. Little emergencies pop up all the time and, if we haven’t prepared for this, we are likely to have to fall back on credit to bridge the gap. If this happens again, আরো credit is used and the cycle goes on, often ending in a debt problem. Setting aside even a small portion of the ‘now’ so that there is something left for later can help আপনি avoid these unexpected potholes in the road, allowing আপনি to reach your destination safely.
If you’re spending আরো than আপনি earn, আপনি are getting deeper into debt. If আপনি spend roughly the same as আপনি earn, আপনি are living paycheque-to-paycheque. If আপনি are spending less than আপনি earn, you’re acquiring wealth – the goal here is to সরানো আপনি from the সেকেন্ড category to the third. Getting out of the paycheque-to-paycheque lifestyle largely requires determination but it also needs আপনি to take a couple of practical steps. Firstly, you’ll need to open a savings account, even if আপনি feel like it’s a pointless exercise because you’re barely scraping দ্বারা as it is. That is the exact excuse I gave myself for years but, once I finally caved, I realized how easy it is to send $20 to the account instead of spending it on something frivolous. Eventually, this will become habit and saving will be second-nature instead of a decision আপনি have to make every time আপনি want something unnecessary.
The সেকেন্ড step আপনি need to take is to make sure আপনি pay yourself first. Work out how much আপনি can pay yourself দ্বারা calculating what your monthly disposable income is and set up an automated transfer to immediately send that amount from your chequing account to your savings account on payday. If আপনি do it like this, you’ll likely not even notice the money is gone. This amount can just be a small amount - $30, $40, $50 out of each paycheque; whatever আপনি can afford. The important thing is that your wealth is growing. A budget can definitely help আপনি manage this process and is highly recommended, as is cost-cutting in favour of saving for the future. I don’t mean losing all amenities, but even losing something like your morning fancy latte can add up and make a real difference without আপনি really feeling any pain.
These small tips are great ways to get yourself out of the paycheque-to-paycheque mindset and into a আরো future-focused routine. If you’re in a position where you’re still weighed down দ্বারা large amounts of debt, it’s important to attack that issue first and foremost. Often, people who have ended up in this position are unable to make minimum payments অথবা at least unable to pay much আরো than the minimum, making debt reduction seem like an impossible goal. At link, we offer debt negotiation services, which means our negotiators will call up your creditors on your behalf and work with them to reduce your debt to a আরো manageable level (typically 50% of the original debt). Once this is paid off, your debt is completely wiped clean and আপনি can সরানো অগ্রবর্তী – only, this time, make sure you’re moving অগ্রবর্তী with purpose. Be the industrious মাউস from this point অগ্রবর্তী and you’ll be in a strong financial position in the seasons to come.
It’s actually incredibly easy to end up living paycheque-to-paycheque – most people have done this at some point. For much of my late teens and early 20s, this is exactly what I did. I’d take care of my necessary expenses, such as rent, groceries, bills, travel, etc, and the rest of the money was mine to burn. It’s actually still hard not to do this; saving is something I have to automate in order to keep myself on track. From what I’ve read on ফোরাম and message boards online, many people are the same way – after all, we work so we can play and saving money is basically just আরো work, right? (A friend of mine really did say this to me a couple of years ago). Well, what my friend failed to acknowledge is that we primarily work so we can survive – play comes second. Accumulating wealth is necessary to survival for two main reasons; firstly, we won’t be able to work forever.
Think of that old fable of the lazy মাউস and the industrious মাউস – the industrious মাউস worked all summer, setting berries and nuts aside so he would have a stash of খাবার during the winter, when he would be unable to simply live day-to-day. The lazy মাউস didn’t worry about the future and, instead, just gorged himself on what he could find; spending the rest of his time just having fun. But when winter rolled around, the lazy মাউস was in big trouble and the industrious মাউস was doing just fine. When our ‘winter’ rolls around (i.e retirement), wealth won’t be anywhere near as easy to accumulate. It makes আরো sense to live like the industrious মাউস and prepare for the future, rather than be in deep trouble because we couldn’t see past the present.
The সেকেন্ড reason accumulating wealth is necessary to survival (in a long-term sense) is because life is not predictable. Little emergencies pop up all the time and, if we haven’t prepared for this, we are likely to have to fall back on credit to bridge the gap. If this happens again, আরো credit is used and the cycle goes on, often ending in a debt problem. Setting aside even a small portion of the ‘now’ so that there is something left for later can help আপনি avoid these unexpected potholes in the road, allowing আপনি to reach your destination safely.
If you’re spending আরো than আপনি earn, আপনি are getting deeper into debt. If আপনি spend roughly the same as আপনি earn, আপনি are living paycheque-to-paycheque. If আপনি are spending less than আপনি earn, you’re acquiring wealth – the goal here is to সরানো আপনি from the সেকেন্ড category to the third. Getting out of the paycheque-to-paycheque lifestyle largely requires determination but it also needs আপনি to take a couple of practical steps. Firstly, you’ll need to open a savings account, even if আপনি feel like it’s a pointless exercise because you’re barely scraping দ্বারা as it is. That is the exact excuse I gave myself for years but, once I finally caved, I realized how easy it is to send $20 to the account instead of spending it on something frivolous. Eventually, this will become habit and saving will be second-nature instead of a decision আপনি have to make every time আপনি want something unnecessary.
The সেকেন্ড step আপনি need to take is to make sure আপনি pay yourself first. Work out how much আপনি can pay yourself দ্বারা calculating what your monthly disposable income is and set up an automated transfer to immediately send that amount from your chequing account to your savings account on payday. If আপনি do it like this, you’ll likely not even notice the money is gone. This amount can just be a small amount - $30, $40, $50 out of each paycheque; whatever আপনি can afford. The important thing is that your wealth is growing. A budget can definitely help আপনি manage this process and is highly recommended, as is cost-cutting in favour of saving for the future. I don’t mean losing all amenities, but even losing something like your morning fancy latte can add up and make a real difference without আপনি really feeling any pain.
These small tips are great ways to get yourself out of the paycheque-to-paycheque mindset and into a আরো future-focused routine. If you’re in a position where you’re still weighed down দ্বারা large amounts of debt, it’s important to attack that issue first and foremost. Often, people who have ended up in this position are unable to make minimum payments অথবা at least unable to pay much আরো than the minimum, making debt reduction seem like an impossible goal. At link, we offer debt negotiation services, which means our negotiators will call up your creditors on your behalf and work with them to reduce your debt to a আরো manageable level (typically 50% of the original debt). Once this is paid off, your debt is completely wiped clean and আপনি can সরানো অগ্রবর্তী – only, this time, make sure you’re moving অগ্রবর্তী with purpose. Be the industrious মাউস from this point অগ্রবর্তী and you’ll be in a strong financial position in the seasons to come.