Do This EVERY Time You Get Paid (Millionaire Payday Routine)

Summary

This video script offers a comprehensive guide to managing finances effectively. It emphasizes the importance of prioritizing money allocation every payday, starting with essential needs, followed by financial goals like emergency funds, credit card debt repayment, and retirement investments. The script also stresses the value of investing in oneself to increase earning potential and suggests strategies for debt-free living. By following this methodical approach, individuals can achieve financial stability and enjoy their earnings responsibly.

Takeaways

• 💼 Always have a financial plan for your payday to avoid living paycheck to paycheck.
• 🏡 Prioritize your needs first, ensuring they don't exceed 50% of your take-home pay to leave room for other financial goals.
• 💸 Be cautious not to confuse wants with needs; a practical car can serve the same purpose as a luxury one at a fraction of the cost.
• 💰 Apply the 'pay yourself first' mentality by allocating money towards your financial goals before spending on wants.
• 🔐 Establish an emergency fund, ideally 3-6 months of essential living expenses, to cushion against unexpected financial shocks.
• 💳 Aim to pay off high-interest debt like credit card balances as soon as possible to avoid paying more in interest over time.
• 📈 Invest in retirement accounts early to take advantage of compound interest and potentially achieve financial goals like becoming a millionaire by 50.
• 💼 Invest in yourself by acquiring high-income skills and seeking valuable training and mentorship to increase your earning potential.
• 🚫 Prioritize paying off non-mortgage debt like student loans and car loans to reduce financial burdens and increase monthly cash flow.
• 🎯 Set non-retirement financial goals, such as saving for a house or early retirement, and allocate funds towards achieving them.
• 🎉 After addressing needs and financial goals, allocate money for wants to enjoy life without financial stress.

Q & A

What is the first place your money should go every payday according to the script?

The first place your money should go is towards covering your basic needs such as groceries, housing, transportation, and paying bills like minimum debt payments, car payments, utilities, and insurance.

Why is it important to keep your needs under 50% of your take-home pay?

Keeping your needs under 50% of your take-home pay is important to ensure you have money left for financial goals and to not live paycheck to paycheck, which helps in getting ahead financially.

What is Parkinson's Law as mentioned in the script, and how does it relate to money management?

Parkinson's Law states that 'work expands to fill the time available for its completion.' In the context of money management, it means that if you have more money, you're likely to spend more, and if you have less, you'll spend less. It emphasizes the importance of managing your money proactively rather than spending what's left after meeting your needs.

What is the second place your money should go after covering your needs, and why?

The second place your money should go is towards your financial goals, not your wants. This includes saving for emergencies, paying off high-interest debt, and investing for retirement. This approach helps in building financial security and wealth over time.

Why is it recommended to have an emergency fund, and how much should it ideally cover?

An emergency fund is recommended to cover unexpected expenses like medical bills or car repairs, preventing you from going into debt. Ideally, it should cover 3 to 6 months of your bare minimum necessity living expenses.

What is the significance of paying off credit card debt as the third place for your money, and what are the suggested starting and final amounts for an emergency fund in relation to this?

Paying off credit card debt is significant because it often carries high interest rates, which can be more than the returns on savings. The script suggests starting with a $2,000 emergency fund while paying off debt, and then building it up to 3-6 months of living expenses once the debt is cleared.

How does investing in retirement accounts like a 401K or Roth IRA help in the long run?

Investing in retirement accounts helps in the long run due to the power of compound interest, where your investments grow over time, and the growth itself earns returns. This can lead to significant wealth accumulation, especially if started early in life.

What is the fifth place your money should go, and why is it important for increasing your income potential?

The fifth place your money should go is investing in yourself, such as acquiring new skills or education. This is important because increasing your skills and knowledge can lead to higher income opportunities, allowing you to save and invest more effectively.

What is the strategy for paying off non-mortgage debt, and why is it recommended to prioritize certain types of debt over others?

The strategy for paying off non-mortgage debt involves focusing on high-interest debt first, such as credit card debt, to reduce the overall cost of borrowing. It's recommended to prioritize this over other types of debt because the interest savings can be significant, freeing up more cash flow for other financial goals.

Why should non-retirement financial goals be considered after addressing all other financial priorities?

Non-retirement financial goals should be considered after addressing other priorities because they are typically less time-sensitive and can be funded once your financial foundation is secure. This ensures that you have a safety net and are investing for the future before pursuing less urgent goals.

How does the script suggest managing wants and treats after all financial responsibilities are met?

The script suggests that after all financial responsibilities, including needs, financial goals, and debt repayment, are met, any remaining money can be allocated to wants and treats. This ensures that financial health is prioritized, and discretionary spending is managed responsibly.