Latest / Money Grows on Trees / #226 - 5 Steps to STOP Living Pay-check To Pay-check

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#226 - 5 Steps to STOP Living Pay-check To Pay-check · Money Grows on Trees

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Only time you should be seeing a restaurant if you're trying to get ahead financially, if you're working in
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there. Don't spend like you're rich until you actually are rich. Know
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your exact numbers. If you don't control your cash, your cash
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will control you. What's the point of being asset rich and cashflow poor? You
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don't need more money, you need better money habits. To get
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in financial shape, you have to start doing I'm Lloyd James Ross, seven-figure
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investor and entrepreneur, and I've helped thousands of business owners and
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professionals turn financial stress into success. If
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you're stuck in old money habits, overwhelmed by investing, or unsure where
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to start, this is for you. I'll give you the mindset and
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strategies to take control, grow your wealth, and achieve financial
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freedom. It's time to make your money work for you. If
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you're always broke by Thursday, this episode is
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for you. Here's how to break the cycle and finally get
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ahead for good. Because let's be real, living paycheck to paycheck
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isn't just stressful, it's exhausting. You work hard, your money
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comes in, and somehow, it's gone before you can even
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breathe. But it doesn't have to stay that way. So in this episode, I'm
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going to break down the five simple steps that will get you out
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of financial turmoil, get you off the treadmill and
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out of survival mode and into wealth building mode.
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So let's get right into it, okay? There's a five-step process we're
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going to go through and the reason we're giving you this episode is because someone
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from our community asked me this question this week and they said, Lloyd, can
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I build wealth if I live paycheck to paycheck? So,
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this one is for them and the short answer is NO! So,
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how do you get out of this paycheck to paycheck scenario so you can
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build wealth which is why we are doing this episode, alright? So, here
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we go. Step number one. You've heard me say this before on
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different episodes but I'm going to say it again because a lot of people are not listening. Ready? Step
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number one, know your exact numbers, because
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most people don't actually know where their money is
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going. So you gotta track your income and track your expenses. In
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reality, you can do it monthly, but some people need to do it weekly, because
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they need to micromanage exactly what's going out, sometimes on
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a daily basis, because it's just that bad, all right? Because awareness
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is the first step to transformation. So the awareness part
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is where is the money currently going? Where are you sending it? Now, what
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it looks like is this. It looks like you're going into
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your online banking right now, so pause the episode, listen
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to this part, then go do it. Go to your online banking, go to
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last month's statement and download it or print it out. And
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go down and actually highlight what you
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spent money on. And I know it sucks
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because you're embarrassed and you're humiliated with yourself about what
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you spent your money on. I get it. But unless you do this, we're just never going
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to change. It's a little bit like if you're going to go and lose weight and you
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don't stand on the scales and get shocked once. Every single great
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weight loss journey started with like, on the scales, holy crap, I
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hate my life. If that's where you're at financially, that's okay. We
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need you to get that wake-up call. Right now, go and
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look at your bank statements, sit there and highlight all the
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ridiculous spending you've done this month and don't do
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it with any entitlement. I had a student
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once, she said, Lloyd, what skincare do I use? I'm like, none. Go
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through and see what's an absolute need and what's just a want. This
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will help you really unpack all these expenses that have crept
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up over the last few years for you. Be brutal and highlight
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what parts you're going to cut. If you don't control
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your cash, your cash will control you. Next part, step number
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two. This is really important. Once you've done the first step, every time you
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now get paid, You must pay yourself first.
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It's not negotiable. Now, this particular lesson comes
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from a wonderful book. It's almost 100 years old. It's
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called The Richest Man in Babylon. And how the man in Babylon became the
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richest man there was he paid himself first. How much? About
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10% of all you earn. And the reason why it's 10% of all you earn is yours to keep
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is because you can live off 90% of your current income without
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it shifting too much of your lifestyle, okay? Believe it or not. And
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so what most people do is they do it the reverse. They'll get paid
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and they'll go, you know what, I'm going to spend it on bills, tax, living
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expenses, and stuff. And then whatever's left over, I'll save
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it. That's called regular saving. It doesn't work. What you got to
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do is flip it and do what's called reverse saving. So
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as soon as the money lands, boom, doesn't matter how much it
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is, 100 bucks, 1,000 bucks, 2,000, whatever, take 10%. Now, 10% is 0.1 times whatever the number is.
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That's how you figure out 10%. For
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those of you who don't know, so if you get paid $2,000, 0.1 times
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2,000, you can do it on your calculator on your phone, equals $200. You
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take the $200, listen up, you
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put it into a different account. That's how
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you pay yourself before you do anything else. And then of course, you'll have 1,800 bucks
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left. then you live off 800 bucks. If you run out of money, stop
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spending it. Shift where you live. If
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you're outspending that, it's because your lifestyle is outspending it. Paying
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yourself first means you then can live off the rest and that means
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that you're building your nest egg for the future. This is the best way to do it. You're putting yourself on
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a budget, zero-sum budgeting. It's the best way to do it. The
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minute it lands, do it. Even $50 a week builds momentum. even
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tender, it doesn't matter. It just matters about the behavior, okay?
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So if I was on a weight loss journey and I saw myself on the scales at
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110, 120 kilos, for me, I'm like 85, so that would be a lot.
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I would start doing certain behaviors. So I
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would start to go to the gym and the behaviors are the most important thing.
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I wouldn't expect to see the scale move much initially as
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long as I was doing those behaviors. And then I got to continue with those behaviors. So
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the first part is not looking for results, it's looking for the behaviors. So when it comes
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to your finances, to get in financial shape, you have to start
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doing the behaviors first and then the money comes. It doesn't come and
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conjure up fast. So yes, put away the $10, put
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something. You got to move the scales somehow. It
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doesn't matter about the amount, just do the behavior. And over time, someone
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will say to you one day, oh my God, how did you get $100,000 invested? You're like,
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well, you're not going to like this. I actually just took 10% of
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all I earned and I put it into an account and did that. Week in, week out,
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week in, week out, week in, week out. Same as if you lose weight. I went to the gym.
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Week in, week out, week in, week out, week in, week out. I changed my food. Week
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in, week out, week in, week out. Ba, ba, ba, ba, ba, ba, ba, ba. This
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is how it works. So once you've done that, what's the next step? Once
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you've paid yourself first, what is the next step? This
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is important. So when you went through and had a look at your bank
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statement, you will notice there are some things you shouldn't be spending money on.
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And it's because we're all entitled. We've come through this incredible wealth growth
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in the world, and now we all feel entitled to
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pet insurance. We feel entitled to that particular car.
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We feel entitled to... a gym membership, we feel entitled
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to creams, we feel entitled to that particular type
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of food. Well, the part of the process of step three of to cut
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your lifestyle creep is to have an honest conversation with yourself and say,
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you know what? What if I was just to just do like
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the most basic human needs? What would my life look like? So let's
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talk about human needs. Shelter, food, water,
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and let's call it some basic clothing, yes? That's it.
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Shelter, food and water and some basic clothes.
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That's like it. If you have a car, entitled. Take
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public transport, get a lift, get a bike, ride.
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Then you have to worry about petrol and car and insurance. We're getting right
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back. If I was in financial turmoil and I had to
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really skin it back, Everything would be on the cutting table. I'd
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probably cancel my insurance. I would cancel my gym membership. I
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would just put everything on the chopping block. And if
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you do that, then it allows you to have this conversation with
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yourself to justify why you do have it. So I'm not suggesting just
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go out there willy-nilly and do it. But I'm talking, I'm giving you permission to
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really be brutal. It's a little bit like, you know, when you go after
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like many years, you go to your wardrobe and it's time to clean out your cupboard
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of clothes and you want to give them to St. Vincent de
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Paul or Lifeline. And, you know, you do your spring clean and
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you're in your cupboard and you're looking at your clothes like, oh, what should
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I throw out? My clothes have feelings, right? You know what I'm
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talking about. You've got to be brutal. Like, I haven't worn you in six months. You're
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out. So it's like, what can you be brutally honest with when cutting your
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lifestyle? Put everything on the table. Order subscriptions, order eating
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out. The only time you should be seeing a
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restaurant if you're trying to get ahead financially is if you're working in there. You shouldn't be going
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on holidays. You know how many people I've coached over the years financially and they
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want to get ahead, they want to build wealth, and then five minutes later they go, oh, we've got a
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family holiday. I'm like, what? Yeah, I
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know, and you can go on a holiday again, but we're trying to get
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ahead here. Listen, these steps aren't forever. This
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is how to get ahead. So just hold
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up on the flipping holidays, right? There'll be time for that.
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But what we're trying to do now is get way ahead. So cut the holidays. Cut subscriptions.
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Cut eating out. Cut impulse buys. Cut, cut, cut, cut, cut, cut, cut. If you've
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got the Amazon app on your phone, delete it. Delete, delete, delete, delete. Eliminate,
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eliminate, eliminate, eliminate. OK? You get the picture. Everything's on
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the chopping block. Don't spend like you're rich until you
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actually are rich. Even then, what you'll find is when you
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get rich, you will learn so many behaviors you will not
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be able to change them. Like I don't go to a restaurant and order like
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the surf and turf every time. I just don't because I
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just know how tricky it is to get ahead and I don't want to fall back. So that's
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why you'll often see wealthy people and they'll have these ingrained habits like, why
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don't they just buy that Mercedes and that car and buy that house and go sell
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it? Because their behaviors are so ingrained as to what got them there, they can't
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easily break them. That's what happens too when you find someone who's in physical shape. Like,
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oh my God, how are you in such great shape? Because their habits have developed are so ingrained now.
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that they can't break them. So bad habits are hard to break and
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good habits are also hard to break. Over 90 days, develop some great
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habits in your money and they'll be hard to break, all right? You don't need more money, you
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need better money habits. Just quickly, if you're ready
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to take control of your finances but feel stuck on where to start, I
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have a solution. My book, Money Bias Happiness, simplifies
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investing and wealth building with practical steps to help you achieve financial
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peace. Get your copy via the link in the show notes and let's get your
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money working for you. Now, back to the episode. Number four, we've
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discussed this on many episodes. In fact, I did a whole
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episode on this one topic and it was building a mini emergency fund, like
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$1,000 buffer, but go for like $2,000, $3,000, really get after it. Sell things in your house. Put
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them on Facebook Marketplace. I had a student of mine sell his car, downgrade.
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I've had many students sell property investments that don't pay off and don't pay because
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they're just cooked financially. There's no point having a property portfolio if
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you literally cannot pay for your petrol in your car the next week. What's the
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point of being asset rich and cash flow poor? You better have to be cash flow
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rich and asset poor. I much prefer that because you can then
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build from there. It's very hard to build from asset rich, cash flow
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poor. And so the whole idea of getting your buffer and your emergency fund is so you
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can actually have some breathing room again. But one thing that it'll do for
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you is it'll actually get you off the credit cycle. So
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if you've got a lot of credit card debt, the reason why that's happening is because psychologically when
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you pay the debt off, you feel you're entitled to then re-spend it again because
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you've earned the right to re-spend and so you go through
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this credit junkie cycle you can't get off, right? And so to get an emergency
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fund together means you can basically build your own credit card, but it's
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a debit card, okay? And this came in very handy for me when we went to Fraser Island one
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day in our car and had two flat tires. I had to put the car on a tow truck and
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it cost me five grand to get the car back. What if I didn't have the money? The
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car would still, well, the car would be in the sand in the ocean on Fraser
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Island and that would be bad. So it can definitely come in so handy because emergencies
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happen and you just don't know when, right? So no more credit card panic.
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I want you to have your own debit account. Emergency fund,
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all right? Cash cushion, breathing room. Step number five,
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increase your income. When's the best time to increase your income? Yesterday.
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When's the best time to plant a tree? 20 years ago. When's the second best time? Today.
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Same with increasing your income. In fact, I will say this, the best time to increase your
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income is when you don't need to. So I look back on my own journey when my wife and
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I were both working jobs. We didn't need to have a side hustle, but I
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like to play 4D chess. I like to actually think
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ahead. And I just thought to myself, you know what? We are both working. We
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have capacity in the evenings and weekends. We can develop our third income. And
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so we didn't need to, but I thought one day in the future, we
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may need that because I know the world is full of ups and downs and uncertainties. So
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with that in mind, we started a side hustle and we worked at it when we didn't
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need the money. It's easier to build a second income when you don't need
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it than it is when you need it. And here's a great example. There's a biblical story with
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Noah and the ark. The story goes that Noah, you've probably heard of
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it before, it's a very popular story, but Noah started building
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the ark 70 years before the
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floods, like 70 years, think about that. And so people were like, why
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is he building this ark? It's not even raining. That was the best time to build
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the ark. What do you think? The best time to build an ark is when you flip it in the ocean?
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What are you crazy? No, the best time to build your ark
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is before it rains. And what I found
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interesting was when COVID hit and all of a sudden people were locked in their houses
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and had no income, they go, Oh, it's raining. Oh, I'm going to
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start building an ark. Too late. But I know some of my students that
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started building an arc three years before then. Guess what? When they lost one student,
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when she lost her teaching job, she had her side hustle she'd built three years
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before, she had her arc. She was floating fine in the rain. So
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the best time to start your second income or build something
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is today, today, today, today. Because one day,
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you'll flip and need it and you'll be bloody thankful that you listened to this episode and
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got after it. Now, don't stop. That
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side hustle we created in 2014 when we didn't need
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it has now produced over $2 million in profits and amplified
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our portfolio to produce more money that we still don't need. Because
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one day, we'll need it. I promise. The world's changing fast.
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Get in front of it. So you can start with, ask for a raise at work, extra
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income. Start a side hustle, extra income, and make sure you're always investing
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in new skills because extra money, extra money. I know this sounds really
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competitive. I know it does. You're like, oh my god, this sounds really hard. Life is pretty hard.
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It's very competitive and it doesn't stop. If you feel like you're
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just trying to stay ahead all the time, because you do. The ones
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that stop, the world goes past them and they just get cooked. They
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do. Don't get cooked. Stay ahead of it. $200 a
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week can completely change everything. You don't have an income problem, you have an
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income ceiling to break. Every single income that's stuck is
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unstuckable. You don't have to keep living on the edge. These are the five
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steps that aren't magic, it's just what works. So track your money,
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pay yourself first, cut the noise, cut out the expenses, most importantly,
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back yourself, increase your skills, increase your income right when you don't
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need it, you need it. You deserve more than just getting by. Take control, start
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now, build the freedom you've been working for, and I'll see you in the
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next episode. Thanks for listening to Money Grows on Trees. If
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you enjoyed the episode, leave a five-star review on Apple Podcasts and
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Spotify and subscribe to us on YouTube so you never miss
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an episode. And if you're serious about building wealth, make sure to check out
15:01
the links in the show notes and follow me on all social media platforms, at