Very few like decisions have the power to change the trajectory of a person's
life and as it happens your financial decisions have that power for you boss i
want to motivate you to seize control of your finances and it's for this reason
that in this video i will share with you the one money move that changed my life
forever and if you're new to the channel then hit the subscribe button below for
more life-changing content now understand this most people grow old
without ever taking charge of their finances they let their emotions do that
for them which usually ends in disaster however to create long-lasting financial
success you must be deliberate in your actions which i have to admit i haven't
always been you see a few years ago i found myself in quite a precarious
position one day i got a call from my mom telling me that my uncle was in the
hospital and that things weren't looking good now the wrinkle in this story is
that my uncle lived quite far away and as such to visit him i would have to
grab a plane ticket to go and see him however as you know plane tickets aren't
free no matter the emergency now at the time money was tight my salary wasn't
exactly exceptional and my spending habits weren't quite what they are today
and as such i really didn't have money set aside to deal with the issue at hand
so what did i do well i had to do the last thing i wanted to do in that
situation was explain to my parents that i didn't have the money to visit my
uncle and ask them to cover my ticket and if i'm being honest i felt terrible
about the situation not only was i embarrassed about not having the money
to cover the ticket but now i was putting my parents out of pocket which
made things even worse in this moment i promised myself one thing i promised
myself that i would never put myself in that situation again by ensuring that i
always had money in reserve fast forward a few months and i was able to not only
hustle to make more money but was also able to sort out most of my bad spending
habits which afforded me the ability to set up a nice amount of cash and what i
want to do now is walk you through my process of saving up a year's worth of
living expenses which quite frankly changed my life forever however to
really entice you to take this financial move seriously first i want to share
with you three of the biggest benefits i've realized since saving up a year's
worth of expenses the first benefit you'll enjoy if you're able to set aside
a year's worth of living expenses is the significant reduction of financial
stress it's been known for some while now that finances are the number one
stressor of americans and let me tell you that from firsthand experience that
having a good sum of money in the bank really cuts down the amount of sleepless
nights you'll have i think we've all had those times in our life where money was
tight and the thought of having even one extra bill come in the mail would put us
over the edge if you ask me life isn't meant to be lived in a constant state of
stress and given we have enough other things to worry about taking money off
of your plate of worries just makes sense the second benefit you're going to
realize when you save up 12 months of cash is much more job flexibility have
you ever been at work questioning why you took that job in the first place was
it because you genuinely wanted to work there or was it because you needed to
put food on the table if it was a ladder then saving up a year's worth of living
expenses may be the ticket you need to escape you see most people stay in jobs
they dislike because their finances don't afford them the ability to take
the risks or make the moves necessary to start a more fulfilling life in fact
given that the majority of americans are living paycheck to paycheck even one
missed payday could mean doom for the finances and as such the thought of
being able to change jobs never even cross their mind however when you have
ample money in stowe you're now in the driver's seat you can start to take more
risks in your career by going out for more challenging and financially
rewarding roles alternatively you can pursue a more relaxed work schedule by
scaling down your hours not being shackled over time or simply going on
unpaid leave to have some time reprieve this should be reason enough for you to
be saving aggressively but if it isn't then let me share with you one more
reason to be doing so the third reason is crucial to set aside a year the third
reason is crucial to set aside a year's worth of savings is that it reinforces
your good financial habits and it raises your overall financial confidence you
see the average american would struggle to meet a 500 unexpected expense so what
would that mean for you if you had 12 months of living expenses set aside you
guessed it you'd be well above your peers and this is a great feeling to
have you see i hate to say it but being like everyone else when it comes to
money is not a good thing most people have terrible financial habits and quite
frankly do nothing to improve them however if you're watching this video
right now then i know something about you i know that you have it within you
to save up a meaningful amount of savings however getting to this point
doesn't happen without proper financial habits being formed and proper systems
being put in place if you're trying to level up your financial confidence and
gain the habits i just mentioned then make sure to smash the like button below
and let me now go over exactly how you can save up 12 months of living expenses
yourself and reap all these amazing rewards stage number one the planning
stage the first step in this journey is what i call the planning stage where you
plan how you want to go about the whole process you start the stage by first
understanding your current financial position this includes identifying how
much you presently have in savings how much income you have coming in on a
regular basis and your regular expense load these figures will act as the
baseline for future action next you want to calculate how much you actually need
to save in total for you to have one year's worth of living expenses set
aside and to do this take your total average monthly expenses from the past
three months and then multiply this amount by 12. this will give you your
ultimate savings figure which once reached will allow you to access all the
benefits i just went over now in an ideal world you already have some
savings set aside and if you do then that's great what you need to do is
calculate the difference between this 12 month savings figure and what you
presently have this is what is remaining to be saved however if you're presently
in debt then you have a bit more work to do now let me clarify something when i
say debt i mean high interest debt you should already have incorporated
interest fees and your monthly expenses but it makes more sense to save after
your high interest debts are gone and as such before you start your journey to
financial flexibility pay down your debts from highest to lowest interest at
this point you should be back at zero and will start to save towards your
ultimate savings goal after you have this goal figure set out the next
element you must include in your plan is a timeline on average it will take you
at least one year to save towards this goal but it could take longer depending
on how aggressively you want to save and as such you should have milestones in
place that will act as stepping stones towards your saving target for instance
if you're looking to save fifty thousand dollars and setting up milestones to
work towards that each ten thousand dollar mark makes sense without these
intermediary milestones the thought of saving tens of thousands of dollars can
be intimidating and may stop you in your tracks before you even start once you
have your goal savings figure your timeline and milestones it's time to
move on to stage number two stage number two the bottom fifty percent stage
number two the bottom fifty percent if you've ever seen an income statement
then you'll know that there are two primary sections up top there's your
income and below are your expenses and the first section you must master in
order to set aside a year's worth of expenses are the latter you see your
expenses are important for two reasons first whatever your expenses are will
drive how much you need to save up and second how much you spend will impact
how quickly you save therefore as you're probably coming to realize having very
low expenses not only makes the path to one year's worth of living expenses
shorter but also makes saving towards it easier now i'm not saying that you're
required to cut even a single expense from your budget in order to reap all
the benefits that having 12 months of living expenses can offer you but what i
can tell you is that while you're assessing your current expenses i am
sure you'll see a few items on the list you can do without each one of these
items that are removed takes you one step closer to financial flexibility
stage number three the top fifty percent as drake would say we started from the
bottom now we're here at the top of our income statement where our income
resides after looking your savings target and your timeline to meet this
figure if your current disposable income is not quite stacking up then it's time
to get serious about earning more money you see when it comes to your income and
expenses the two share two unique characteristics with your expenses they
can only be reduced to a bare minimum level because you will always have to
spend some money on food clothing and shelter moreover with expenses the
associated sacrifice comes in the form of a decline in standard of living as
you continue to give up more of life's luxuries on the other hand we have your
income with income the sky is truly the limit someone who has two thousand
dollars of expenses can only reduce them by that amount but someone making two
thousand dollars can easily make five times that amount meaning the potential
to save with your income is much greater now like the reduction of your expenses
using income as a tool for saving does come with its sacrifices generally to
make more money you'll be trading active time to do so which means that instead
of giving up expenses that add to the quality of your life you'll be giving up
your time instead now at this point in the video you should have all the tools
you need to start saving up towards your one year's worth of living expenses that
will offer you a host of different benefits however if you still want a bit
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next video is the one that will change your financial life forever give it a
watch and let's see if they're right