7 Reasons You’re Living Paycheck To Paycheck | 516

0:00If you're living paycheck to paycheck and you have no idea where your money actually went. this episode is for you. Most people are budgeting by paycheck, dumping everything into one account, and hoping for the best. Which leads to surprise expenses, decision fatigue, and way more overspending than you realize. Today we're breaking down seven real reasons people stay stuck in the paycheck to paycheck cycle. And how to start budgeting so you can finally get a paycheck ahead. Do you make good money but have nothing to show for it? Are you tired of living paycheck to paycheck? Do you have big dreams for your financial future?

0:32Do you want to get debt-free, but you don't want to live on beans and rice? Or you don't want to give up those pumpkin spice lattes? Hey, it's okay if you don't already know how to budget or if you're using credit cards to get through the month. Hey, it's okay if you want to seem like you have your finances all together or you're not on the same page with your spouse when it comes to finances. We know what you're doing probably isn't working, but guess what? You're in the right place. We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey.

1:01We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money. In this podcast, we'll share with you everything we know, plus everything we're working on with our clients so that you have the best chance at reaching your financial goals. We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on the conversation. We can help you no matter where you're at, whether you're the single mom who's never had$500 in her savings account or the millionaire who's paid off four real estate mortgages.

1:33And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time. This is the Financial Coaching for Women podcast. Vanessa, the first reason people are living paycheck to paycheck is because they're budgeting by paycheck instead of by month. Yeah, we actually get that a lot when people join coaching. They're like, okay, so these paychecks pay these bills and this paycheck buys us groceries. And I'm like, nope, we actually need groceries for 30 days, not just for 15. And so what we're saying is by form, by design, you're living paycheck to paycheck because you have set your whole system up that way.

2:10And that's fine. We're going to tell you like there's a lot of things that you didn't know or you didn't know there's a different way. But that in itself is living, keeping you living paycheck to paycheck. And there's a better way. And we understand why you started that way. You have all these bills due on the first, right? So you're using that first month paycheck to pay for all of this. And then you're hoping to be able to buy everything else the last part of the month. But it doesn't work that way. Oh, it doesn't. You need money to be able to spend freely throughout the entire month, not just half.

2:39And so that's why you feel so strapped half of the month. It's like that feast or famine situation. I think that number two should be you don't have a budget because it much more naturally goes into that instead of going – I feel like we're going to be jumping around. You know what I mean? Sure. Okay. Can we switch up? It's – yeah, whatever. Okay. And so that leads right into what we suggest, which is you need to have a budget and we want you to be able to look at the month like as a whole. Instead of paycheck to paycheck, look at what all of your paychecks in one month can do on one budget. Yeah.

3:10And before you completely dismiss it because you're like, nope, I can't do that. I've already tried it. It doesn't work. We would recommend just taking our budget template. and if you don't have it, it's budgetbesties.com forward slash budget template. It's the free version. Take that and just write everything down and go, okay, this is all the money that I'm getting in one month. This is all that I'm going to do with it. So just see it first. And then we're going to make a plan as to how you can make sure that you're not living paycheck to paycheck. Yeah. I like that you said that, Vanessa, because I feel like it's just, just give it a try.

3:37Just be creative. Just write it down. And so the one that Vanessa is talking about, you're going to print it out and you just write it all down. And it is so interesting to see what your money can do in a month when you're not forcing yourself to be in this paycheck to paycheck cycle. So we would recommend you do that. And by the way, that budget does do everything in a month because your life really does cycle in a month. While your paychecks, your paychecks may come every other week or whatever, but they are planned monthly, right? Your salary is broken down monthly, right? And so it's supposed to be in a month.

4:06Your bills are happening in a month, right? And so then we are going to have you do the other parts of your budget that are important, which is spending and savings, we're also going to put that monthly so that everything can be in the same framework and you can see everything at once. Yeah. Another reason why you're living paycheck to paycheck is because you have everything in one account. All right. So think about this. All your income's coming in and you're spending out of that one account. You don't know if it's, if you have, if your water bill has pulled yet, if the mortgage is being pulled yet because it is a holiday weekend or whatever, and then you have family coming in town, you have this fee due, you have that going.

4:38There's so many questions happening in that one account with all this money and it's not separate. It's not clear. So you don't know what's going on. Yeah. And I don't, I don't love that. I just, I got stressed out when you were just like, when you're just listening, I don't love that. But you know what it actually made me think, Vanessa, and we always say this. So if you haven't listened to our podcast, go binge all of the episodes. And we will always tell you that having everything in one account is by far the biggest problem. It's so much. The other thing that we find is you have everything scattered all over the place as well.

5:07So you do have most of your things going out of this one account. And it's, if you were to scroll through one month, it would take a minute because you can't get through everything. But then you have this little onesie thing over there and this other thing over here and this one. And I don't actually know what's happening. I'm just barely trying to survive. We get that. We don't want that for you. Imagine how unclear that is for a second. Okay. You are trying to buy groceries. You're trying to give your son field trip money. Your husband has to buy something at Ace Hardware for the house. And you have all these bills that are pending.

5:34And maybe you wrote a check because you're old school like me sometimes. And you had to do that on property taxes. There are so many things going on. And so we're trying to remove that. We're trying to completely remove that feeling of unknowing, like the unknown, right? And separate your money so that way you know exactly what you can spend throughout the month and what's being pulled out as a bill. Instead of just spending it all till it's all gone and then waiting until like with white knuckles and holding your breath until the next paycheck drops. Yeah, absolutely. And then another reason, so let's keep going down the list here, is let's talk about unexpected expenses that are totally expected, right?

6:09So So when we talk about, I'm sure you've heard us say it in the past, what are some unexpected expenses? We're talking about that vet visit bill that's coming or your dog goes every January to the vet. Let's talk about your child's birthday that's coming up that happens every year. Let's talk about - I don't want to talk about that. Right. Let's talk about Easter. Like we know that comes all the time. Let's talk about 4th of July. There's so many things that happen. Let's talk about that annual family vacation that you take every spring break. There are so many things that come up that we consider unexpected expenses and your HOA dues and all that.

6:38but they're actually expected. Like we know that they're coming. And so what we want you to do is plan for them on purpose and not feel taken back when that$400 bill comes to you. And you're like, I don't know what to do. When you do things like this, that means that you're planning like by paycheck, which is what we're, the episode that we're talking about. And even by the month, like you're only saying, this is what I'm going to spend this month. When instead, what we want you to do is take a bird's eye view, take a step back and go, what do I cost? So that way you can put it in your budget and you can be prepared.

7:07and that way you're not because you're living paycheck to paycheck because all of these unexpected expenses come up and you forget about them. You're unprepared. That's what I was going to say. I feel like what people do is they're like, look, I'm doing so good. I have$500 left of my paycheck and I'm going to put that and they put it in savings. They're like, everything's fine and I'm doing so good. And then it's the unexpected expense. And that happens to you every single time. What Vanessa is saying is on purpose, we're going to start planning for those things so that yeah, you might put a hundred in this one savings bucket, a hundred in that one and a hundred in that one.

7:36But you can also still not spend every dollar because you're planning ahead and those unexpected expenses won't come and become an emergency this paycheck. When if I had the whole month to pay for it, maybe, or the whole year to pay for it, I could have done it. But it's derailing me because I'm still living in that paycheck mindset. And maybe you're still putting $500 aside in the month, but you're putting it away on purpose. So Shana said, maybe 100 is going into your annual bills account and 100 is going into your home repair maintenance fund and 100 is going over here to vehicle fund because you know you have oil changes.

8:05So on purpose, you are planning where that money is going. So when those expenses come up and you have to pay for them, you already have the cash. And it's not just in a random account that we're calling savings that doesn't have a purpose. And we started this. The first reason was you're budgeting paycheck to paycheck, right? Yeah. And that's not enough. Life is happening too fast, too many things going on for you to be that narrow in your scope. And we're even saying only budgeting by month is too narrow. And so you really have to broaden your view. You're going to live in your monthly budget, but you need to broaden your bird's eye view to a whole year.

8:37And that will help you truly stop living. That will be one big thing to help you stop living paycheck to paycheck. And that'll make you, that'll help you make your monthly budget. Yeah, correct. Yeah. Okay. Here's another one. I see this all the time, Vanessa, I'm sure you do too, that because people don't have a spending budget, this is what keeps them living paycheck to paycheck. And they say it. They say, I don't really know if I had the money and I didn't really care. Eventually they get frustrated or their decision fatigue. And so they just spend everything till there's zero in their account until the next payday.

9:05Yeah. When we're talking about spending budget, like a spending part of your budget, people literally put all their debt payments, they put their bills, and they're like, oh, whatever's left is whatever's left. But nothing is designated to specific things. So then they don't know what's really happening. And even when we ask people like, hey, how much do you want to spend on you this month? they've never even thought about that because they just spend in the account like shana said until it's gone and they're like maybe now i'll swipe a credit card we don't want that for you yeah and so what this will do is it will give you you're going to set aside money to spend on purpose and what we've seen is you naturally will spend less when you know you have spending money when you have no permission necessary no guilt no shame money for you to spend every month you will naturally spend less and as a result that will help you stop living to paycheck to paycheck because we're actually going to have you separate that too when i was talking about the one account you're actually gonna have your spending just in one account over here and you really can like narrow focus in on that and just be like Okay, I just can't go.

10:00I just I can go to zero here Everything else will be taken care of and that will really help you to stop living paycheck to paycheck because you have this Let's say$200 every paid pay period for you You get for you to spend if you have that and you know you have it your Ability or your desire to drain everything else to zero is gonna be probably a lot less You're gonna have less stress and decision anxiety as well and so that binge spending might happen but it'll happen with your$200. With guardrails. So it's like that amount in that account becomes your new budget for spending and it's not affecting your bills, it's not affecting your savings, it's not affecting your debt payments or anything like that.

10:35It's completely separate. So it really does and we hear it all the time. I can't believe by me putting guardrails on my spending I end up actually having money left over. Yeah. Because Shayna said you naturally are more aware of what's going on so you naturally spend less. Yeah and I just really one more time to reiterate, I feel like what I hear a lot, a lot of people do the overspending, the binge spending, because they don't know they have money and they're rebelling against this one account and all the bills and stuff. And so they just spend money. And this, having a separate spending budget, I think really does take that psychology away.

11:07All right, budget besties, it's time for some Real Talk. You don't need another budget. You need a budget system. Our simplified budget system is what you've been looking for. It's going to allow you to be bougie on a budget. You'll be able to easily set up a system that runs automatically and shows you exactly where your money is going. And it's going to give you permission to spend. Everybody loves that. Yeah. It's straightforward, pretty, and packed with walkthrough videos that break down the exact methods we use with our clients to get out of debt, set up a bills account, separate spending, build savings buckets, and end the paycheck to paycheck feel.

11:43If you're new to budgeting, this is the perfect way to jump in. And if you're already a budget nerd like us, you're about to meet your new obsession. This is the upgrade to your finances that you need right now. Yeah. So head on over to budgetbesties.com forward slash budget and grab yours. Now back to today's show. Yeah. I think another big reason, Vanessa, number six and sixth reason you're living paycheck to paycheck is because you're paying for the past instead of funding your future. I had clients that made really good money, really good money, but somehow maybe with their best intentions, they got signed up for this credit card that they had to.

12:20So a lot of you do this on purpose, but they had to pay off the entire balance every month. And so while they made good money, their credit card bill was also$7 ,000 that they had to pay. And that came out of their paycheck. And then they had to try to figure out, like Vanessa was saying, how to live off of the other one paycheck the entire rest of the month. And it was just a mess. And that might be something that you're doing too. Because sometimes you're racking up the credit card, but then also draining your checking account oh it's not oh well just use the checking account to pay off the credit card every month no now both like one's high and one's zero and you can't you can't pay off zero one you can't use the zero one to pay off the seven thousand dollar one so it just becomes convoluted and so you're continuously paying for your past not funding for your not funding your future so that's what we want for you want you to pay for everything in cash and not have to worry about because shana how many times do we have people tell us i didn't actually have to use a credit because i made a budget and i realized what was going on my finances they found out that they made too much money to even need a credit card, but they didn't know because they didn't know they're not.

13:17They didn't know they were using it because they don't know. Just out of ignorance, not necessarily necessity. The other thing that is keeping them living paycheck to paycheck in this little topic is you might have a lot of debt minimums that are eating up your budget. And so if you get everything on one page, like we told you, if you go to budgetbesties.com forward slash budget and get our budget and get our debt tracker, list it all out and really come up with a little bit of a game plan, you can eliminate some of those minimums and it will keep that or will take some of that pressure off of your budget and off of your paychecks to have to pay so much debt.

13:47I mean, sometimes we have people that are paying$2 ,000 or$3 ,000 in minimums a month. And like, we look at it together and they're like, oh, I see what the problem is. If I didn't have that, what could I do with that money? And so that's keeping you from having the wiggle room in your budget that you want and that you deserve to be able to do other things and fund your future, right? Like we're talking about these unexpected expenses. Think about having$2 ,000 going into savings every month instead of minimum debt payments that you could be funding Christmas, holidays, vacations, all of that.

14:14That's the goal. Yeah. Okay. So finally, first of all, let's review real quick. We talked to you. We said there are seven reasons that you're living paycheck to paycheck, right? One of them is because you're budgeting by paycheck instead of by month. The other one is you don't have a budget. Makes sense. Everything, a third one was everything is in one account. Number four was that you don't have a spending budget specifically. Number five was that you don't have a spending budget specifically. Number six is that you're paying for your past instead of funding your future. And here's number seven, the big capstone.

14:42You've never been taught how to get a paycheck ahead. I think when we talk about that, Shana, in our podcast, it's like an epiphany moment for people. And they're like, yes, I want that. Tell me how. And listen, it's not as hard as you think. We want to urge you to, in that time of month where it's feast, okay, not famine, we want you to take that money and start building a buffer for the famine part of your budget. So that way you can have that buffer that you need so you can always be a paycheck ahead. Yeah, the way this looks is that, let's say you get paid the last Friday of the month and your spouse gets paid the Wednesday before.

15:19Okay, so you're getting those last two paychecks of the month. We actually put those into the next month, the very first paycheck for that to fund that month. And then you put the next two paychecks or however many times you got paid. But we're taking the end of the month paycheck and putting it toward next month. That way money is just sitting there, pulled up, ready to do all the things. You're ahead of the game. The amount of peace that comes from that, from not having to wait and make a late mortgage payment or having to have your paycheck drop, but the bills were due yesterday or the day before.

15:50That's what we want for you. And yes, putting those paychecks, getting a paycheck ahead, really, first of all, solves the paycheck to paycheck problem, but it also gives you so much more peace. And also, so what we're saying is when that money drops in the account, it's not being used for any of the bills in the current month because you've already got that covered and it's just waiting in the account for the upcoming month's bills. And having your bills and your spending separate, it doesn't allow for like that, like dip. Oh, I'm just going to take some money because early because I need it. That money is sitting in your bills account and your spending is totally separate and that's already funded.

16:23You already have the cash to know what you can spend on. And that money is not tempted. You're not tempted. Yeah. So for example, I'll just say real quick this week, I did a budget with some folks. And so what we did is we went through their budget and they got paid a week ago. And that was for the next month. So we account for that. That's in the account. When we're going through and clearing and doing all the budgeting, we're looking at last month knowing that, hey, by the time we clear all the bills and get everything reconciled and everything's finished, you should still have that$3 ,000 paycheck in your account.

16:55It's sitting there just getting ready to do its job for the next month. And that is what we're talking about, getting a paycheck ahead. Yeah. And listen, if it's something you haven't had a chance to look at or do or think that it's possible for you, we will tell you, Shana, has there been a client in six years that we've worked with that we have not been able to get them a paycheck ahead? No. And it actually happens quickly. Like it's not been months. It doesn't take a long time. It just takes you to be able to sit down and look at your numbers and it's possible for you. So we know that you can do that.

17:21We do have an episode on how to get a paycheck ahead, like step-by-step on how to make that happen for you. But just know, we listen, we know that you've never been taught. We get that. And we want to change that for you. We want you to live out. We want you to stop living paycheck to paycheck and start living a paycheck ahead. All right. So if you love this episode, please share it with someone. Hopefully some of the stuff probably sunk in, probably hit home. And if you would share it with someone else, that would be wonderful to appreciate that. We're trying to get our message out to as many people as possible so that all of you can stop living a paycheck dead.

17:51And if you girls are like us, like at workout class or whatever, we're all chatting, we're all talking. And so there may be somebody that has brought up their finances that they need some help. We would love for you to, like Shanna said, share this and then also leave us a review. We'd love to hear your thoughts. And if you could share that with us, we would be forever grateful. If you're tired of feeling like your finances are all over the place and you're ready for a simple set it and forget it way to budget, we have something special for you. Watch our Automate Your Budget Masterclass at budgetbesties.com forward slash automate.

18:20We'll show you step-by-step how to finally organize your money, how to set up your accounts, and put your budget on autopilot so your bills, saving, and spending run like clockwork. Imagine less stress, more savings, and the freedom to spend money without having to track every dollar or babysit your bank account. Go to budgetbesties.com forward slash automate to start today.