9 Reasons Small Business Owners and Creatives Live Paycheck to Paycheck
Hi Friends, Today, I’d like to discuss 9 reasons people live paycheck to paycheck and offer a few solutions.. (If you prefer to watch the video, please check it out here…)
Hi, my name is Lucas and I love to help business owners and creatives improve their finances. In my 20s and 30s I was completely oblivious as to why I was living paycheck to paycheck But, as I started to improve my finances through the Big Split and began helping clients do the same, I noticed several habits that keep us in financial prison. So let’s take a closer look.
#1 & 2: A Poor Flow Of Money (and not realizing it)
The first 2 reasons we live paycheck to paycheck have to do with the flow of our money and are often overlooked because they are quite subtle.
#1: Giving our money to everyone else first
Ever wonder why there’s no money left over once you pay your bills? Because we have trained ourselves to give it to everyone else first and we put our goals last. We get the money, we spend the money and there’s nothing left for us to keep. But when we change the order..
Get the money, KEEP some money, and then Spend, the cash flow improves. It’s called Paying yourself first. Whether you would like to save for a house, investments, or be free of your debt, put money towards your goals FIRST. If you’d like to learn how to, check out this video..
# 2: Paying taxes first
Now do the same thing with your taxes. As an employee or freelancer, we give our money to the government first But as business owners, we improve the flow of our money by paying taxes last.
Plus, when we’re taxed through a proper business entity, we can take advantage the tax incentives and pay less of them. Check out this video to learn more and be sure to consult with a tax pro who’s familiar with your local laws.
By the way, I teach how to do both, plus everything else we’re going to talk about in today’s video inside of The Big Split Program. If you’d like to radically improve your finances with me, in less than a week, comment the big split and i’ll send you some info.
#3: Avoiding Our Financial Problems
Dale Carnegie once said, “Inaction breeds doubt and fear” - because we don’t know how to fix our finances, we do nothing, the fear grows and we prolong the paycheck to paycheck cycle.
The solution? 1st, Recognize that avoiding your finances is doing more harm than good. 2nd, Educate yourself - Books, youtube videos and a good course or money coach can help you improve rapidly. And 3rd, take action.
There’s 2 exercises I teach in The Big Split that can help - First, we do a financial house cleaning where we close, consolidate and simplify our bank accounts, credit cards and bill paying - it cuts through the avoidance get’s you organized - check out my youtube tutorial here
The 2nd is to practice regular financial check ins. Autopay may be convenient but when our finances are out of sight and out of mind, we lose track of our spending. The solution? Log in to your bank accounts and credit cards once a week to make payments and check balances.
It takes less than 5 minutes and is much easier than budgeting.
#4 and 5: Not knowing how to use CC AND Shitty Spending habits
As I mentioned in the previous step, when we have no connection to our finances, things tend to get out of control and that leads us to the next 2 reasons most people stay stuck. Not fully understanding how to use credit cards and having no accountability for our spending.
#4: Working for CC instead of having them work for you
When we use credit cards to buy things that we can’t afford, we trap ourselves. When we make 1 payment per month like they suggest, we trap ourselves. And when we use multiple credit cards, thinking its good for our credit, we trap ourselves.
They more cards we have and the slower we are to pay, the longer we stay living paycheck to paycheck. But when we get them working for us, we don’t have to pay fees and we can be rewarded for our spending. Learn how to harness the power of credit cards in this video..
(GFX Problem 2: No Accountability)
And when it comes to having no accountability for our spending, there’s a simple solution… Put all of your purchases on 1 credit card, log in once a week and make multiple payments to your card. I log in each Sunday, and I set up 3-4 payments for the week.
They want you to pay once a month, but when we pay more often, we avoid interest, fees AND we don’t screw ourselves with a huge monthly payment. PLUS, by logging in each week we stay on top of our spending with a financial check in.
Today’s lesson is a tiny fraction of what I share in the Big Split program so if you’d like to transform your finances in 1 week, click here to schedule a free 60 minute call with me.
Thank you for your time and energy. I’ll see you in the next one.
Lucas Z.