SPEAKER_00 0:07

Welcome to Money Talk for Real, a podcast where I talk about making money, spending money, and everything in between. I'm Nick, and in this episode, what I'm going to talk about is quite simple. And it's how to stop living paycheck to paycheck. I'm going to do my very best to give you a step-by-step breakdown on how to stop living paycheck to paycheck, because doing that is one of the most stressful ways to live. And if you're in that world right now, then you know because it's not just about the money. It's also about, you know, you're constantly checking your bank account. You're constantly trying to time the bills out perfectly, and you're just hoping that nothing unexpected happens. What if there's an emergency that happens, right? The worst part is a lot of people feel stuck in it. Like no matter what they do, they just can't get ahead. So in this episode, I'm not just going to talk about it. I'm going to do my best to also give you a step-by-step way to actually start breaking out of it. No complicated budget spreadsheets or any of this other crap, no unrealistic advice, just a simple system that you can use to store, you know, you can use to start doing this immediately. Before we fix it though, we need to understand it because living paycheck to paycheck isn't always about the income. A lot of times it's about the structure. So here's what's usually happening is that let's say your money comes in and then it goes out with no real plan. The bills hit, the spending happens, and whatever's left just kind of disappears. And then you're waiting for the next paycheck. That's not that what I just described is not a money problem. That's a flow problem. Most people don't have a system. They have habits, they have behavior issues. And I don't mean mental behavior. I mean like money behavior issues. And habits or behaviors, especially spending habits, will absolutely keep you stuck. I get it. That's probably why you feel that way. That's why you're feeling the stress. Step one, know your real numbers. It's very simple, but most people skip it. You need to know your numbers. You don't need to be guessing. You don't need to be estimating or approximating. You need to know them. How much do you make? How much do you spend? How much do you spend in each category? Meaning rent, car insurance, food, gas, eating out, et cetera. Know your numbers. Here's what I want you to figure out. How much money comes in each month? That one's usually the simplest to figure out because we pay the most attention to that part as a human, right? But then also figure out how much goes to your fixed bills. Fixed bills meaning things that you have to pay every month no matter what. This would be like your electric bill, your water bill, your gas bill, the rent, car insurance, whatever it is, fixed bills. And then figure out how much you're spending on everything else, meaning eating out, getting drinks, buying clothes, um stuff that doesn't have to happen, but you do it anyway. And the important part is when you do this exercise is don't try to make it look good. This is your money journey, your financial situation. Don't try to make it look good. Be honest. Be honest with yourself. I'd love to help you, but I don't personally care what your money situation is. It doesn't affect my life. It affects yours. So be honest about it. Because if you know where your money's going, you have it, you know, if you know where your money's going, you can try to control it. If you don't know where your money's going, you have zero chance of controlling it. And this alone, for a lot of people, is a wake-up call because they realize I'm not broke. I'm not just, I'm, you know, I'm not broke at all. I'm just not paying attention. Okay, step two, create a bare minimum plan. And this is where people can sometimes mess up. They try to build the perfect budget and then they don't follow it. That's the die hard method the other finance gurus will say. Nothing wrong with that. The key thing is though, most people don't follow it. So instead, I want you to create a bare minimum plan. This is your kind of if nothing else goes right, this still works type of plan. You're gonna focus on three things. Number one, the bills. These are the bills that have to be paid no matter what, no questions asked, non-negotiable. Number two is the essentials. The essentials will be, you know, for a human, we're talking food, water, and shelter. This is gonna be like food, gas, basic living. Those are gonna be your essentials. And then number three, a small buffer. Even if it's $20, even if it's $50, $100, you need something. And that's it. Don't overcomplicate it because a simple plan that you follow beats a perfect plan that you ignore. So keep it simple. Something that you can actually stick to and follow. Number three, and again, these are the steps that I want you to take to try to stop living paycheck to paycheck. Number three, stop the bleeding. Now we fix the biggest problem here. The money leaks. This is where your money is just quietly disappearing, going off into the sunset every single month. Typically, what I see, it's on things like subscriptions, it's on things like eating out constantly, convenient spending, paying for time that you don't have to cook that meal. It also is these days, a lot of times on random Amazon purchases. Fix that. Fix the money leaks. You don't need to cut out everything, but you do need to cut something. Again, I'm not going the die hard method, but work on something immediately. Don't do the wait later. I'll figure it out later. No, do it right now. Cut something. Here's the rule pick two to three things and reduce them hard. And you're not doing this forever, just long enough to create breathing room in your household, in your personal finances. Because right now, you don't necessarily need optimization. You need momentum. So cut something and reduce them hard, meaning as hard as you can with but still allowing yourself room to live. Step four, create a buffer. This is the turning point. This thing is the thing that will separate the I'm stuck from I'm starting to get ahead. You need a buffer, you need a gap, you need a margin. Even a small one will help because living paycheck to paycheck means every dollar is already assigned before you even get it. You haven't even seen the money yet, and you already know where every single penny is going. So your goal is simple get ahead by one paycheck, or even half of a paycheck. If you can start there, that buffer will do a few things. It will automatically reduce your stress almost immediately. It will stop or at least prevent you from panicking. And honestly, it just allows you to breathe a little bit, a little bit of breathing room. Imagine the stress that just goes away when you can get ahead, even one paycheck or half a paycheck. And once you have that, everything can start to feel different. You're not reacting anymore. You're deciding, you're starting to become in control of your own money. Step five. And this is just real talk. This is money talk for real. You know what I'm saying? Step five would be to increase your income. Now, here's the part that people don't always want to hear. Sometimes you do need more income, but not in a crazy way. You don't need, number one, if you have a good job and you don't feel like you're making enough, I do not recommend just bouncing out and leaving your job to go chase a couple more dollars an hour. I do not recommend that. But you also don't need five side hustles. You don't need a full-blown business overnight. You don't even need a $25,000 a year raise at your job overnight. You need something simple. Can you pick up a few extra hours? Can you sell something small? It could be stuff you already have laying around your house. Can you pick up a short-term side income? And again, I don't know your situation. If you're already working 90 hours a week, this is going to be a lot more difficult than if you're working seven to three and you have the evenings off. But the truth is cutting expenses absolutely helps. But increasing income accelerates that. That accelerates everything. That's the cherry on top. Even if it's an extra $200 a month, an extra $500 a month, that can completely change your situation. The next step I would recommend is build some sort of system. Again, once you start getting out of that cycle, you need a system to stay out of that cycle, the negative cycle of living paycheck to paycheck. It doesn't have to be complicated. Just something like, you know, for example, money comes in, the bills get covered. A set amount of money each month goes to spending. No matter what your income becomes, lock in how much money a month can go to spending, lock in how much money a month can go to savings. And stick to that. That's it. It's simple, it's repeatable, it's sustainable, it's something you're able to do without completely changing your life in a negative way. Because the goal isn't as, you know, the goal is not to escape paycheck to paycheck once. It's to never go back to that. Doing it one time doesn't do a lot for you. But if you can do it over and over and over and get out of this financial stress that you're in, that's the whole point. That's the whole point of me making this episode and talking about this. If you're stuck living paycheck to paycheck right now, it's not about being perfect. It's about just starting one step at a time. Know your numbers, make a simple plan, cut back a few things, build a buffer, and then lastly, controversially, increase your income. And if you can do that consistently, you will get out of it. If this helped you, please let me know. Please reach out to me. If you want me to walk through your personal financial situation, you can do that on my website at moneytalkforreal.com. Click on the debt help link. I would love to hear from you. For now, leave a five star review on this episode. Like the video if you're watching on YouTube. I'll catch you on the uh next episode. This is Money Talk for Real.