A few years ago, I was living paycheck to paycheck and was constantly stressed about
my finances.
And then I got mail...
Additional tax payments, additional heating costs and I have to start paying off my student
loan.
This all came at the same time and I was lost...how was I going to pay it all off?
I'm not alone in a situation like this though, because in 2022 just under 64% (have CNBC
article flown in) of all Americans are living paycheck to paycheck while inflation keeps
going up and up and it's just an easy guess that this fate is likely to befall many.
So I realized I seriously needed to do something about my financial situation and today I'm
going to show you my 5 ways I managed to break out of this cycle and master my financial
situation.
And to be honest, 1 particular way I'll show you today towards the end of the video would
already be enough to eliminate all your money problems.
This is the one I was shown by my mentor and today I'm showing it to you.
So if you're someone who's always living paycheck to paycheck, constantly stressed about your
finances, and you've always wanted control over your money, definitely stay tuned!
But before we get to the main topic of the video, first of all welcome back and if you
are new on our channel...
We are the Finance Nerds and we cover topics in personal finance, from saving money to
investing and we support you on the way to your financial goals.
But now let’s dive deeper into the topic!
As said in the beginning, currently 64% of all Americans live from paycheck to paycheck
and this while inflation is currently on the rise.
Everything in life is getting more expensive from food to energy costs such as gasoline,
heating and electricity.
And maybe you're just managing to live paycheck to paycheck and thinking to yourself "that's
not so bad" at least you're managing to pay all your bills on time, right?
So it doesn't sound so bad at first.
But you want more, you want to change your financial situation, otherwise you wouldn't
have clicked on the video.
Because this way of thinking is not very future oriented, I'm sure we both agree on that.
Because if you live paycheck to paycheck it is not possible for you to save money, build
security for the future and certainly not lead a financially stress-free life.
If we remember my example, where all of a sudden many unexpected bills came my way and
I had neither financial reserves nor the possibility to build them up in the future, you can certainly
imagine how I was feeling at that time.
Therefore, in the next few minutes we will deal with my top 5 ways with which I managed
to break the cycle.
You'll also learn how to start with little money even if it is just $1 and build a stable
financial situation over time, what the KFF account is and you'll learn the ultimate money
management system that my mentor taught me.
Check the emotions that are holding you back Really important point, if you do not pay
attention to this, then you will always have a difficult time bringing real change into
your life!
Because most fail in the implementation not because of lack of knowledge, but because
of bad emotions that hold them back.
Especially when you live from paycheck to paycheck, you often have negative emotions
like stress, fear and overwhelm.
And exactly these emotions hold you back from really changing something, because you got
used to these negative feelings.
These feelings have become your reality and when you want to start changing them, your
own ego tries to keep you down.
Do you know the saying "You are usually your own worst enemy"?
That's exactly where it comes from, because your ego actually only wants to "protect"
you from the unknown, that's our basic instinct.
In that case, the "unknown" is that you are financially better off, have no financial
stress, anxiety or overwhelm.
Sounds crazy, but unfortunately that's how we function.
But how can you implement this now?
There is only one way, and that is to get out of your comfort zone and just do it.
To make it much easier for you and to prevent your ego from taking control again, the 2nd
way that comes next is essential!
2. Make a Budget….
seriously do it now!
I know I know, how many times have you heard this tip now?
100 times and more?
I hope you have implemented it.
If not, do it now... please!
You can't do it without a budget.
Without a budget you won't manage to break the paycheck to paycheck cycle.
Without a budget you have no way to work on your finances because with a budget you PLAN
your finances and without a plan you lose yourself.
Think of it like taking a trip in your car.
You don't just get in your car, drive off and hope to arrive at the right place, do
you?
No, of course not, you plan the route with your navigation system and follow it until
you arrive at your destination.
Of course, there might be a few moments here and there where you take a detour, but in
the end you end up back on the right route and that's exactly what you do with a budget.
So do yourself a favor and do it now.
Feel free to use our All-In-One Personal Finance Tracking sheet, the download link can be found
in the video description.
With the budget you also really manage to get into the implementation and not let yourself
be guided by your feelings.
For starters, you can simply create a % budget where you divide your income into e.g. living
expenses, fun/leisure and saving/investing and debt payments and allocate a certain % rate
to each area.
But we'll get into that much more specifically when we get to my mentor's ultimate money
management system!
3.
Change the approach You are probably wondering what I mean by
this.
It's relatively simple to explain...
When you live from paycheck to paycheck many people tell you: "You have to start living
below your means", "You have to save more money" or "Use these frugal living tips" and
sure these tips are not bad by any means and are also very important, but they leave one
point completely out, namely: You have to start building up assets.
This is the new way of looking at it.
There are 2 variables to stop the cycle: The 1st variable is the one where you start to
optimize your finances, save more money and make a budget so exactly what we did in the
beginning and the 2nd variable is that you have to start to build assets to produce more
income.
Because if you focus on building wealth, you will automatically manage your money better
and do the right things with your money.
Do you remember our Wealth Winning Method, which is the basic principle of wealth building?
It goes like this: 1.
you have to save more than the average 2.
you have to earn more than the average and 3.
you have to invest more and better than the average and we are now focusing on 1,2,3 at
the same time.
Namely with the KFF account.
The KFF account is your account to financial freedom.
It's simple: you put 10% of everything you earn into your KFF account, even if you received
tax refunds for example.
The money from this account will only be used to BUY capital assets such as stocks, real
estate or cryptocurrencies or to buy or create passive income streams.
4.
Before we start with the complete money management: Take care of your debts
Again: doesn't sound exciting, but it's just as necessary as starting a budget.
Debt just makes all your financial steps toward improvement harder.
So in the future, it's about avoiding debt completely and systematically paying off debt
you've already incurred, and you'll learn how to do that now!
5.
The most easiest and effective Money Management System
To be honest, that is actually the only way you really need and that saved me at that
time!
With the establishment of this money management system, everything changed for me abruptly
and I am grateful to this day that I met my mentor and he showed me the money management
system of the really financially successful people.
It's simple: for each category mentioned in the same way, it's best to create a separate
account so that you have a good overview.
In addition, you have a "collective account" where all your money receipts such as income
or e.g. tax refunds are posted.
From there you transfer manually or automatically the following % rates to the following accounts:
10% to the financial freedom account.
With this account you build your financial freedom by creating assets or passive income
streams.
This account will never be used for any other purpose.
10% for long term saving for later expenses.
So this account is just for major purchases like a car or house renovations etc.
10% Education account.
This account is used to improve and deepen your skills.
This is very important so that you can improve your skills and create more value and earn
more money.
As an example, if you become an absolute expert in an area in the company you work and no
one else has that expertise, you are very well placed to get a raise.
55% for necessities such as food, clothes, insurance, rent, gym, transportation, etc.
My mentor said to this, "If you can't live on 55%, simplify your lifestyle.
Wealthy people think long term.’’
10% Rewards Account.
This account is for treating yourself to something nice like a massage, nice restaurant or spa.
Also, this account must be emptied every month.
5% Donation / Debt account.
Here I deviate simply little from my mentor, because actually these 5% are really only
meant for donating, however straight for highly indebted humans own these 5% very well around
the debts faster to pay off.
As soon as the debts are paid off, 5% are donated.
And if you want to learn how you can live under your means and save more money, use
these 5 ways from the video in the middle now!
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We hope to see you in the next video.