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Are you tired of living paycheck to paycheck?
Are you sick and tired of struggling with money while seeing others get ahead?
The good news is you can change your finances for the better.
In this post, I am going to show you how to get ahead financially.
By following the steps outlined in this plan, you can end the stress money has over you and build your wealth.
All it takes is you to read through this post and start taking action.
In a few short months you will begin to see changes to your finances and your life.
What are you waiting for? A new and better financial life is waiting for you!
10 Steps To Get Ahead Financially
#1. Change Your Money Mindset
The very first thing many of us need to do is change our attitudes about money.
After living with a lack of money, we tend to look negatively at our finances.
This bleeds over to us believing we will never have enough and things will never change.
This needs to stop and you need to start thinking more positive about your finances.
Think about it.
Whenever someone is creating a new idea, do you think the thoughts in their mind is telling them this is impossible or it can’t be done?
While I’m sure they have that thought from time to time, they quickly push it to the side and focus on success.
Otherwise, why would they keep trying to invent?
A healthy mindset is a key tool successful people use all the time.
And you need to tap into it.
So start to work on being more positive when it comes to money.
When you get money you weren’t expecting, celebrate.
Say to yourself how thankful you are for it.
You should do this daily as well.
Tell yourself a few money affirmations every day or leave sticky notes with these sayings where you will see them.
Before you know it, this change in your outlook will pave the way for what’s next.
#2. Understand Where You Stand Financially
In order to stop living paycheck to paycheck is to get an understanding of where you stand financially.
After all, if you have no idea what your issues are, how are you going to fix them?
Additionally, you might have the wrong ideas about what the issues even are.
You might think that you simply need more income, but a closer look might reveal you are wasting a ton of cash on dumb things.
Luckily, getting an idea of where you stand is easy.
Start off with a pen and piece of paper.
Create two columns on a paper.
- Column A (the left side) has your actual monthly income
- Column B (the right side) has all of your expenses, including mortgage, car loan, utilities, food, etc.
Now total up both columns and see where you are at.
Are your expenses more than your income?
For many people this is the case, otherwise you wouldn’t be struggling financially.
Now this doesn’t mean you simply need more income.
Like I said earlier, you might be making dumb spending choices.
By cleaning these up, you might be in much better financial shape.
This leads us to step three.
#3. Create A Spending Tracker
You need to see where your money is going if you want to make a change.
So for the next 30 days, you need to write down everything you buy.
And I mean everything.
Doing this will give you tons of information such as:
- Your current cash and credit balance
- Items that you spend the most on
- Subscriptions you have ignored but have been eating away your cash
- Purchases you bought on impulse that you don’t need
- Other budget leaks that you are unaware of
- Reveal a spending pattern you need to address
The good news is if you buy things with your credit card, you should already have this information.
Many times, if you log onto your credit card account, you should be able to see a spending summary.
The only issues you will face is if you buy a lot on Amazon, because these purchases are broken out for you.
Luckily you can go into your Amazon account and see more details.
But this isn’t the case if you buy groceries and household supplies at Target.
Once you have the information, put all your spending into categories and total them up.
This will give you a good idea of how you are spending your income.
#4. Cut Back To Get Ahead
Now comes the part where you need to roll up your sleeves and get to work.
You are going to start to cut back on spending.
Think about what makes you happy in life and then look at your spending.
If you love experiencing new restaurants, you probably won’t want to cut back here.
But maybe you realize you rarely watch cable and would be better off subscribing to a streaming service like Hulu or Netflix.
Take the time to know what you enjoy and then work on cutting back on other areas.
If you don’t value those things, cutting them back or even completely out shouldn’t have a big impact on your happiness.
Another great way to cut back on spending is to take part in money saving challenges.
These have you go a period of time, say a week or a month, without spending in a certain category.
So if you find dining out isn’t your thing but you spend hundreds of dollars a month on this expense, try a no spend challenge.
The goal is not just to limit spending, but also to have you realize that you don’t need a lot of things you think you do to make you happy.
#5. Plan Your Spending
Now that you have made some spending decisions, it is time to finally set up a budget.
You can get as detailed as you want here.
Some people work best by tracking every penny.
Others just need an overview.
I recommend you start out with an overview.
And the best way to do this is with the 50/30/20 budget.
With this monthly budget, 50% of your income goes towards needs, like housing, utilities, etc. and 30% goes towards wants.
The remaining 20% goes towards savings and debt repayment.
So take your spending and put them in the needs and wants buckets and do the math to see how much of your income makes them up.
For example, if you earn $2,500 a month and your needs total $1,300 and your wants total $925, then the percentages come out as follows.
- Needs: 52% ($1,300/$2,500)
- Wants: 37% ($925/$2,500)
Understand you don’t have to hit the goal targets of 50% and 30% exactly.
As long as you are in the ballpark, you are good.
The only exception to this is if you have a ton of debt.
In this case, you do want your percentages to come really close to the target so you can put as much money towards getting out of debt as possible.
Doing so will free up more money in the long run. I’ll discuss this in more detail shortly.
If you find that these two buckets total more than 90% of your income, you need to find ways to cut out some more spending.
Here are some great reads that cover many ways to cut back and save more every month.
- Related: Learn 80 ways to save money today
- Related: Click to learn how to save money on groceries
- Related: Find out 53 fun free things you can do for entertainment
- Related: Learn how to cut your electric bill in half
Of course you may need to find more income as well.
If you decide on the more income route, the additional income you earn is to go 100% towards debt and savings, assuming your wants and needs total more than 90%.
So the moment you paid, move the money to savings or it should be mailed or electronically sent to the company that has your debt.
#6. Get Out Of Debt
If you are carrying debt, regardless if it is credit card debt, student loan debt, medical bills, or other high interest debt, you need to pay it off now.
The sooner you pay it off, the more income you free up.
For example, let’s use the numbers from above again.
You are spending $1,300 a month on needs and $925 a month on wants. You earn $2,500 a month.
Of the $1,300 is $300 for your car loan.
By making extra payments on this debt you pay it off sooner.
And this means your monthly needs bucket goes from $1,300 a month to $1,000 a month.
You now have $300 more every month to save! And if you were putting some money from the 10% savings bucket towards the debt, you freed up even more.
This is a critical part to getting ahead financially.
If you are always paying someone else, meaning you are in debt, and not paying yourself, meaning saving money, you will never get ahead.
You need to stop the cycle every other person is stuck in and do the opposite.
Now, many of you have lots of debt.
So I don’t want you to think paying off your debt is happening overnight.
- Related: Learn how to beat debt for good
It will take time.
But if you are disciplined and work hard at it, you will make progress and eventually pay it off.
And the best way to organize your debt is to use the debt snowball method.
This has you order your debt from smallest balance to largest and focus on paying off the smallest debt first.
Most people that use this method for getting out of debt are successful, so I highly encourage you give it a try.
By focusing on the smallest balance first, you motivate yourself to pay off more debt, which is the snowball effect.
#7. Start Saving Money
I touched on this above, but to change your finances, you need to start saving money.
Even if you cut back your spending, if you don’t saving or invest anything, you will never build wealth.
So take a portion of the 10% bucket in your budget that is marked for savings and save some of it.
Using our example above, our savings bucket would be $275.
If you have no debt, then you save the entire amount.
Here is how to save this money, assuming you have zero debt.
- Put 10% into your 401k at work for retirement savings. If you don’t have a 401k then put it in a Roth IRA.
- Put 80% into an emergency fund for unexpected expenses.
- Put the remaining 10% into long term savings for a financial goal. This could be for a house, car, etc.
Do this until you have 6 month’s worth of expenses in your emergency fund.
Then increase your 401k or IRA contribution to 20%, put 20% into your emergency fund, and the remaining 60% into long term savings.
If you do have debt, then here is your guide.
- Put 5% into your 401k or Roth IRA.
- Put 10% into your emergency fund.
- Put 85% towards debt.
Once your debt is paid off, then follow the savings plan above.
Doing this will help you to break free from living month to month financially.
#8. Take Advantage Of A Windfall Of Cash
If you are like most people, you get a tax refund every year.
This is a great way to boost your savings and change your finances for the better.
But it doesn’t stop with a tax refund.
Maybe you earn an annual bonus at work.
Or you inherit some money.
However you come into money unexpectedly, you need to take action on it.
And this action isn’t buying a new car or truck.
Too many people waste these windfalls when they could use them to boost their financial situation.
Here is a great way to use this money wisely.
- Take 15% and spend it however you want, no questions asked.
- If you have debt, put 60% towards debt and the remaining 25% into your emergency fund.
- If you don’t have debt, put 60% towards your emergency fund and the remaining 25% into long term savings.
This allows you to use the cash to change your finances and still get the enjoyment out of spending some of it.
#9. Increase Your Income
In some cases, you will need to earn extra income to cover your monthly expenses.
This is especially true if you are trying to live on minimum wage.
But even in you are earning a decent income, you still may want more income to pay off debt faster or to build your savings.
There are two options you have.
You can get another job or you can work to earn a higher salary from your current job.
It is up to you to decide which path you want to take.
Let’s start with your current job.
Increasing Income From Your Job
If you put in the effort and do things right, you can start earning 5% raises, and in some cases more.
I talk more about this in the post below.
But this isn’t the only thing you can do.
You might be able to increase your pay by learning more skills or getting more education.
There are many ways to do this without paying thousands of dollars by going back to college.
Take some time to see what skills you can improve upon or learn that would make you more valuable to your employer.
Finally, as a last resort, you could consider switching jobs.
Many times you can earn a bump in salary by changing employers.
But this shouldn’t be your first option. Try the other suggestions first.
Increasing Income From Side Hustles
There is also the side hustle route to making extra cash.
The trick with a side hustle is to find something you enjoy doing.
Going to work at a fast food restaurant isn’t going to work out if you have no interest in doing it.
You will get burnt out and eventually quit.
You need to do something you like so it won’t feel like work at all.
You will look forward to doing it and this will help you stick with it and change your finances.
So take some time to figure out what you enjoy doing.
Thanks to technology, there are endless possibilities for side gigs.
You can check out Side Hustling Money for some great ideas. You may even be surprised at what you find.
As I mentioned earlier, if you are earning side income to help pay off debt or to boost your savings, you need to be disciplined.
The moment you get paid, you need to put the income into your savings account or put it towards your debt.
If you don’t, you will be tempted to spend it on things you don’t really need.
The end result is you will be stuck in the same financial situation next year and the year after that.
You’ll get frustrated because you are working two jobs and nothing is changing.
Don’t make this mistake.
#10. Get One Month Ahead
The short term goal for you is to get one month ahead financially.
What exactly does this mean?
Look at your financial situation right now.
You get paid and that money on payday is already spent as it is going towards bills.
The result is your bank account balance drops to near zero until your next paycheck.
And when the next paycheck comes in, it is already spent too.
You want to get to the point where you are paying this month’s bills with last month’s income.
This breaks the living paycheck to paycheck cycle.
In other words, you have a buffer in your checking account.
So if you are earning $2,500 a month, after all your monthly bills are paid, you will have $2,500 in your checking account.
This will free you of more stress than you can imagine.
And it will happen automatically as you follow the budget I laid out for you.
Just understand that this will take time.
But it can be done.
You just need patience and the right mindset as discussed earlier.
Resources To Help You Get Ahead Financially
There is a lot of information in this post and you might want some more information on the things I talked about.
Here are some great resources to help you achieve your goal.
There are two things I highly recommend you do to cut your expenses.
First is look at your car insurance.
By comparing rates you can save hundreds of dollars.
My favorite is Gabi.
Just download the app and they will compare your policy to up to 40 other insurance companies.
Then they show you the 6-8 best ones.
Tap the button and they will switch coverage for you.
It takes 2 minutes and they save you on average $950 a year!
Click the link below to see how much you will save.
Next up is your cable bill.
You could spend your time trying to haggle with them, but there is no guarantee they will actually lower your bill.
Instead I recommend you use Trim.
This service will negotiate for you. And they save users on average $30 a month!
Click on the link below to save money on your cable bill.
The easiest thing to do when it comes to savings is to open up a savings account at the same bank where your checking account is.
But if you use a traditional back, the interest you earn is peanuts.
A better option is to use an online bank.
I like CIT Bank.
They consistently pay a high interest rate and dealing with them is simple and easy.
You can open your savings account by clicking on the link below.
What if money is really tight and you are having a hard time saving anything?
This is where Qapital comes into play.
You link Qapital with your debit card or credit card and when you buy something, your purchase gets rounded up and that amount is moved to savings.
For example, if you spend $4.29 at Starbucks, Qapital will round that up to $5 and transfer $0.71 from your checking account to a savings account.
You might think these round up amounts don’t add up, you are wrong.
I save over $500 from rounding up my spare change every year.
To get started, click the link below.
At the end of the day, you can get ahead financially.
It just takes a plan and some work.
I’ve outlined the entire plan for you here.
All that is left for you to do is get to work.
You can do this.
There’s nothing more frustrating than running the rat race day in and out.
However, it all boils down on your desire and discipline to make a difference in your life.
You don’t need to earn $200,000 a year or live on rice and beans.
All you need to do is take one step at a time, one month at a time, and before you know it, you will see positive changes in with your money.