Do THIS When You Get Paid (Paycheck Routine)

Summary

In this video, the speaker addresses the common financial struggle of feeling broke despite high incomes, attributing this to a lack of a structured paycheck routine. They introduce a three-step system to automate finances: linking accounts for automatic transfers, establishing a smooth money flow with scheduled payments, and customizing the system for irregular incomes. By setting up this routine, individuals can pay themselves first, manage bills effortlessly, and save for goals without stress, ultimately leading to a richer, more fulfilling life.

Takeaways

• 😀 Many high-income individuals still feel financially strained because they lack a paycheck routine.
• 💰 Establishing a consistent automated money system allows you to pay yourself first and spend guilt-free.
• 🔗 Link all your financial accounts to automate transfers and simplify your money management.
• 📅 Set up your automatic money flow to align with your income schedule for less hassle.
• 📊 Aim to save at least 5-10% of each paycheck to build your savings habit and achieve financial goals.
• 🚫 Avoid playing defense with your finances; instead, proactively manage and automate your money.
• 💳 Automate your bill payments and fund your investment accounts for a streamlined financial process.
• 🔄 Adjust your financial system to accommodate irregular income, maintaining a buffer for stability.
• 🏖️ Establish clear savings goals, such as setting aside three months’ worth of expenses for emergencies.
• 📚 For deeper insights and personalized adjustments, refer to the book 'I Will Teach You to Be Rich.'

Q & A

Why do many high-income earners still feel broke?

Many high-income earners feel broke because they lack a structured paycheck routine, leading to financial disorganization and a tendency to overspend without tracking their expenses.

What is the main goal of the three-step paycheck routine?

The main goal of the three-step paycheck routine is to automate personal finances so individuals can pay themselves first, enjoy guilt-free spending, and reduce financial stress.

What is the first step in the paycheck routine?

The first step is to link all financial accounts together, allowing for automated transfers from one account to another as soon as the paycheck is deposited.

How can automatic savings be set up effectively?

Automatic savings can be set up effectively by establishing a direct deposit into a checking account, then scheduling transfers to savings and investment accounts immediately after the paycheck is received.

What is the significance of automating bill payments?

Automating bill payments ensures that expenses are paid on time, reduces the risk of late fees, and simplifies financial management, allowing individuals to focus on other priorities.

What should be done if bills are due before the paycheck is received?

If bills are due before receiving a paycheck, it is advisable to adjust the billing dates with service providers to align with the paycheck schedule, making financial management smoother.

What is the purpose of maintaining a buffer amount in the checking account?

Maintaining a buffer amount in the checking account acts as a safety net to prevent overdrafts and ensure that all automatic transfers can be completed smoothly, especially during the initial setup.

How can someone manage their finances with irregular income?

Those with irregular income can replicate the system for each paycheck or create a savings buffer that allows for stable living expenses, ensuring they can cover costs even during low-income months.

What is advised regarding credit card payments?

It is advised to pay credit card bills in full each month to avoid interest charges and debt accumulation. Setting up automatic payments for the statement balance is recommended.

What overall philosophy does the speaker encourage regarding financial management?

The speaker encourages a philosophy of simplicity and automation in financial management, advocating for setting up systems that allow for consistent saving and investing without constant oversight.