Get out of the paycheck to paycheck life with this simple money management formula!



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00:00 The System
01:15 Step 1
03:06 Step 2
04:51 Step 3
07:05 Step 4
10:14 Step 5


In this video, I explain a five step plan to manage your money in a way where you will never have to worry about running out of money.

1. Understand Exactly Why People Are Living Paycheck to Paycheck

The reason that majority of people are living paycheck to paycheck is not necessarily that they aren't making enough money, but it's because they are managing their money in an unsustainable way. They simply make money and then spend money, which makes then 100% dependent on a paycheck, and if the paycheck stops coming in, then they have no money to fund their lives. In order to break out of the paycheck to paycheck life, you must break away from this unsustainable financial plan.

2. Adopt A Frugal Mindset

Once you understand why people are living paycheck to paycheck, the next step is to adopt a frugal mindset. It is important to remember that being frugal is managing your money in a way where you are not wasting anything nor depriving yourself. The average person could save hundreds of dollars each month if they just cut out their wasteful spending. When you focus on cutting out wasteful spending, you will probably have some money left over before you receive your next paycheck. Being frugal alone will not solve your financial problems, but it will allow you to have more money left over instead of wasting so much.

3. Begin Establishing The Emergency Fund

Now that you have adopted frugal habits, the next step you take is establishing the emergency fund. To do this, you must "pay yourself first," which means once you get paid, before you start paying your bills, you take out a specific amount of money that you can afford and put it in a savings account for emergencies. It is important to not use this money unless there is an emergency. Ideally, you should build this up until you have six to twelve months of living expenses. Once you complete your emergency fund, you are no longer 100% dependent on a paycheck because you have the emergency fund to rely on.

4. Begin Getting Your Money To Work For You

Once you complete your emergency fund with six to twelve months of living expenses, you no longer need to put money into it due to inflation. Instead, you should focus on investing the money in the stock market in order to outpace inflation and maybe make a little extra money on top of that. Putting your money in the stock market by investing in low cost index funds is a source of passive income, which is money you are making without doing any work. By doing this, you are now putting your money to work and it is making you money, so in addition to the emergency fund you now have the investments starting to make you money.

5. Get Creative And Continue Expanding

Finally, once you have established your emergency fund and have began investing, you are no longer extremely dependent on a paycheck. You can start to explore other avenues of making money in your life because you are not desperate for a paycheck anymore. In order to create new streams of revenue, you must be creative and think outside the box. Some options are continue investing, start a side hustle, or start a business. Once you start adding new streams of revenue, you are not as dependent on your paycheck coming in and have developed a much more sustainable financial plan.

**This video is intended for entertainment purposes only, none of it should be interpreted as financial advice. Links above are affiliate links where if you click and order, I will receive a commission at no cost to you. **