Have you ever had an ideal income in mind that you wished to earn? This is the imaginary number that many believe will allow financial freedom. Most people believe the more money they make the sooner they will be able to pay off debt, retire, and live the lifestyle so truly desire. The problem with this wishful thinking is that people are currently living the lifestyle they desire while watching their paycheck flow through their hands.
Yes, most are spending more than they earn without acknowledging their behavior.
Although employees realize that some items are not within their reach, they go to extremes just to obtain it. They begin to live by the mantra— Go Broke or Go Home. This is rather interesting because some are so broke that they eventually lose their home to foreclosure.
According to a 2014 Brookings Institution study, “More than 25 million middle-class American families live paycheck to paycheck.” Some employees are apprehensive about the next steps to take. While others are successful with working overtime, but are not able to properly manage the extra income. Instead of prioritizing their paycheck, they spend the money as quickly as they receive it; hence, a continuous “broke” cycle. Do you wonder why you are not able to make ends meet? Is your paycheck gone before you cash it? The following may give you an insight on what you are doing, or not, with your money.
No ‘use it or lose it’ plan. Just like anything else in life, if you do not take control it will control you. With that being said, it is important to dictate where every penny in your paycheck is going. If not, you will find yourself broke before the weekend ends. Before each paycheck, write down all your expenses so that you are aware of your money and where it goes. Think of it as a child. Before it can leave the house, you must know where it is going, how long will it take to get there, and check in once arrived.
Do not prioritize. There are many households that pay bills as they come in the mail or when the disconnection notice has arrived. There is no sense of organization. It’s unfortunate that most purchase what they want before paying their bills and on time. Make a list of your monthly responsibilities. Your responsibilities will include what is and not listed on the ‘use it or lose it’ plan. Prioritize beginning with what you cannot live without (i.e. house, utilities, food, insurance, car payment, etc). Weekend excursions to the club and sales should absolutely be at the bottom of the list. Quality time for self will possibly be listed, but you can find ways to treat yourself without spending money. Remember, if you want your paycheck to last longer than it has, you must be willing to sacrifice by taking care of your responsibilities while finding a way to stretch your check.
Never create financial boundaries. If you cannot afford to lose the money that you loan, then you must not lend any parts of your paycheck. The same goes for self, if you are going to have buyer’s remorse because your fridge is empty, bills have not been paid, and there is not money in your pocket, then do not go on a shopping spree. Learn to say, ‘no’, when the outcome does not benefit your household. Your responsibility is to get and stay on financial track.
Improve how you think about money. You cannot financially flourish with the same mindset as before. With that being said, wealth begins with you. Change how you look at money. Money is a tool for a secure lifestyle, not for immediate gratification without incentives.
- Watch how much you spend.
- Visit your budget every week.
- Keep track of your behavior.
- Respect your money.
- Control your impulses.
- Open a saving and retirement account.
- Set up automate deposits.
- Stick with your plan and have an accountability partner.
Money will stay and work as hard as the person commanding it. It is easy to spend hundreds or even thousands of dollars in one weekend. But it takes an obedient individual to stick with a plan.
Bahiyah Shabazz is the President of Shabazz Management Group, Fabulous & Money Savvy and BROWN GIRLS DO INVE$T. She has appeared and given financial advice on various media outlets, and is the author of Women Building Wealth.