Do you want to learn how to save money, grow your wealth and eventually be financially free whilst currently living paycheck to paycheck? This video taken to the four simple steps you need to know in order to grow your wealth whilst living week by week, fortnight by fortnight or month by month.
The first step is to write a budget. It’s so important that you know what money is coming through and what money is going out and how can you better organize it to save at least 10 percent of what you earn, take at least 10 percent of your income, perhaps even more, and keep it for yourself and find a way to budget the rest of your expenses. Not being able to save 10 percent of your income might mean having to cut down on some certain expenses. Perhaps that may mean paying forty dollars for a pair of clippers to generate years of pay cuts rather than paying twenty dollars to get a haircut from above that every three weeks it may look like downgrading your car or drinking your daily coffee at home instead of your local cafe. But sometimes this is what is needed to get out of the suffocating life of living paycheck to paycheck and getting on the right side of wealth. Step three, pay off your debt. Not for those of you who have debt, which is probably most of you, it is vital that we stop paying off those debts, use that 10 percent that you are saving to pay off your debts immediately. There are two main ways of paying off debt. One being the snowball method and the other the high interest method, the snowball method as when you pay off your debt by balance, starting with the lowest balance and then working your way up.
This is the method that Dave Ramsey recommends as teachers need to find a sense of accomplishment, which obviously you feel you’re paying off their small debts first, or the high interest method where you pay off your debt, starting with the highest interest rate. The other method is it is important to stop paying off your debts, step for compound interest, do the risk when all your debts are paid off and your saving wait by week. You can let the power compound interest grow your savings at quite astounding rates.
It’s just important that we ensure our financial habits are on track so that we can get on the right side of compound interest, not the horrible side. So that’s the basics of how to keep saving money while living paycheck to paycheck. Now, this is a long term game and it’s not a get rich quick scheme, but the strategy works if you are disciplined and regularly check your financial habits and financial plans.