Does this sound familiar to you?
1. You make money.
2. You spend money to live.
3. You never have any money left for anything else!
It’s a constant cycle of living paycheck to paycheck, paying off debt, and keeping up with the Jones‘!
I was definitely
saying living it… month after month! So frustrating and discouraging.
Financial problems have an impact on more than our money situation… it affects relationships, health and overall outlook.
I don’t know about you, but my parents never talked about finances. Sure, they may have complained about prices or used the “money doesn’t grow on trees” line but no real conversation about personal finance.
My teachers never had lessons on personal finance. Financial literacy was not on the schedule!
My high school economics class was only good for cleaning out my purse every day! Counselors during the education years talked about friendship issues, not finances.
So at the ripe old age of 30.5, I started from scratch on the path to financial transformation. I was so fed up with the cycle! I was tired of consumer debt and the monthly credit card balance that never got smaller due to minimum payments and high interest rates. It doesn’t matter what age you start working on financial problems, it only matters that you start as soon as you decide to end the cycle.
The tipping point for me was borrowing money from our parents for a down payment on a used vehicle. They were happy to help us out, but I was embarrassed.
Financial problems feel heavy and frustrating. But here’s the good news…
Failure can be our biggest enemy and our greatest teacher. It can lead us to positive change because we reach the tipping point and are ready to do something different.
In this case, it caused me to channel all my stubborn energy toward a goal of financial freedom.
Fast forward a few years and our financial situation looks completely different.We started being solution-driven instead of problem-focused. You can do the same!
When you start focusing on solutions, your financial problems will get smaller. You can use the motivation to get out of the paycheck to paycheck cycle, pay off debt and establish an emergency fund.
Your lifestyle, including eating out and (simple) vacations, doesn’t have to change drastically. Once you start making small financial changes, they start adding up over time. You will find that the decisions you made one month positively impact the next month. The decisions you made the year before will set up for more success the next year.
Which leads to this question…
Where can you start on this path to end the financial struggles? The answer is that you can start from scratch and you can start today!
Maybe you won’t be a millionaire tomorrow but you’ll soon find out millionaires are not who you think they are.
Here are 5 solutions to change your financial trajectory.
You must own your numbers in order to change them. Who do you pay and when? Do you know your credit score and creditors? Bank account balances? Debt management starts with knowing your numbers for everything from the daily coke from the vending machine to groceries to health insurance. After you’ve done this for 2-3 months, you can stop. Our spending habits are very predictable and your numbers are not likely to change except for the months when there is extra spending for holidays or special occasions.
2. Create a spending plan
Instead of calling it a budget and limiting yourself, call it a spending plan or a pay-off plan and decide where and how you will spend your dollars. You start telling your money where to go instead of the other way around. Use a piece a paper or a spreadsheet, it doesn’t matter where you write it down, it just matters that you have a map that lays out a path to prevent overspending or late fees. A spending plan becomes your guide to financial independence.
3. Create a savings plan
Save more to live more! Savings provides much more than money. It provides peace of mind and a path to being debt free. Once you start building your savings every month, you begin to own your financial situation and have extra cash to cover unexpected monthly expenses.
4. Set financial goals
There’s the saying, what you focus on gets improved. Setting financial goals also helps change your money mindset. Changing your mindset about money is key… it turns your thoughts to “if they can do it, so can I” which leads to action. Action turns problems into solutions. Not only can you turn your current financial situation around, you can start saving for retirement and reduce financial stress.
5. Avoid previous money mistakes
Take a new path and learn from previous choices that created financial burden. If you’ve paid off your car, enjoy the freedom from a monthly car payment. Managing your money means making different choices with your finances to get different results.
Those 5 steps will improve your finances, which, in turn, will improve your life. It also helps to read some of the best personal finance books that have stood the test of time.
Maybe you are also starting from scratch. Maybe it feels like there’s no way out of the cycle.
No matter your circumstances, it is possible! The changes may be small at first, but every little change you make will lead you closer to your goal.
Start by deciding you want out of the cycle. Tell yourself that it is time and start believing that you can achieve wealth.
No matter your age or financial situation, there is always an opportunity to learn, improve, and change your circumstances. Financial problems can be solved with small changes that yield big results!