I am very fortunate in my line of work to be able to help people break through cycles that might have existed in their family for generations. My favorite is the cycle of generational poverty because I’m in the process of breaking that cycle for future generations of my family. The most common cycle I help others break is the paycheck to paycheck cycle. It just so happens that breaking paycheck to paycheck can lead toward breaking cycles of poverty too. Let’s focus on breaking paycheck to paycheck for this post.
To break the paycheck to paycheck cycle, there are 3 fundamental building blocks.
(1) Believe you can.
Most people believe they will always be paycheck to paycheck because that’s all they’ve ever known and there seem to be too many things to do with a paycheck and not enough paycheck. What’s the alternative to “I’ll always be paycheck to paycheck” or “I’ll never have enough”? The empowering belief is this: “I choose what I do with my money.” What a minute? I don’t choose to pay taxes, I HAVE to pay them or the IRS will lock me up in jail. I don’t choose to pay rent or have a mortgage, I HAVE to put a roof over my head and my family’s. Sure, sure. But you choose where you live – which impact both your taxes and your housing costs. When it comes to your money you likely have way more control than you give yourself credit for.
(2) Question what your money is currently doing.
How do you tell your money what to do if you don’t know what it’s doing now? First, we take the time to get a handle on what’s coming in and what’s going out. You have to know what you have and what it needs to do. It’s like you get a lay of the land before charting your journey. Practically, that means recording every dollar that enters your life and what it does for a period of time – maybe a month.
So let’s assume you know what you’re money is doing… you’ve got the snapshot, now you can start asking questions like:
- “Is this what I really what these dollars to do for me?”
- “Could I find a way to make these dollars work smarter?”
- “What if I tried ____ instead?”
As you ask those questions, you start to see ways to break the paycheck to paycheck cycle by taking charge of your cash flow, which the 3rd building block.
(3) Take charge of your cash flow.
When you begin to believe “I choose what I do with my money” and you know and question what your money is currently doing, the natural result is often that you take charge of your cash flow. Simply put, taking charge of your cash flow is all about telling the money coming in what to do. It’s often the first step to getting off the hamster wheel of paycheck to paycheck. Telling your money what to do leads to all sorts of benefits. For some creative ideas on how to get your money working smarter, check out this post.
These are the 1st 3 building blocks on your path toward breaking the paycheck to paycheck cycle. After these are set, you’re ready for the 4th, 5th… 100th step or however long the journey takes. My parting encouragement is this: Remember it’s a journey. You’ll go as far as you can see – make the changes to improve how your money is working for you – and then you’ll see farther – you’ll see new things to try with your money.
I share about more on this topic on our podcast, Grandma’s Wealth Wisdom. Here’s the link to the full episode. Be sure to look for the “Wealth Journal” that helps you take the insight we share and put it into action.
p.s. This works with your business finances too!
Content provided by Women Belong member Amanda Neely