I am firm believer you should be living paycheck to paycheck regardless of how much you make. This may sound counterintuitive, but hear me out. You should be living paycheck to paycheck for many reasons, but we will keep it simple and stick to three.
Reason #1: Every Dollar Should Have A Job
The first and most important reason you should be living paycheck to paycheck is because every dollar should have a job. The second you earn money, you should be assigning that money to make money for you! Again, this goes back to my first core principle.
There are many different types of jobs your money could have. This can be and not limited to the following:
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Emergency Fund
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Retirement Investment Accounts
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Brokerage Account
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Sinking Fund
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Saving for a downpayment on a home
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Common monthly expenses
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Your splurge savings
Now that you have every dollar assigned to a specific something, let’s look at two more reasons you should be living paycheck to paycheck.
Reason #2: Living Paycheck to Paycheck Makes You Feel Like You Don’t Have Much
Have you ever looked at your bank account and said to yourself, “Dang!! That is a lot of money, now I have money to go splurge on stuff I don’t need!”
Yeah, me either.
When you live paycheck to paycheck, you won’t run into this potential thoughts in your mind. Many people are programmed to buy things when you are bored or see a lot of money in your bank account. This is common. Technology is more intelligent and advertisements you see target the things you like. When you see an advertisement for something that looks appealing, you are more prone to buy it.
Keep the bank account low, and you will have already assigned your paycheck to more important things.
Reason #3: Living Paycheck to Paycheck Shifts Your Mindset
When analyzing how you spend money, living paycheck to paycheck will make your become more of a minimalist. This will help to shift your mindset and begin to ask yourself tough questions. Before buying something, you will become more critical in ensuring you had budgeted for the expense. The more you can do this, the more you will shift your mindset to assigning your money to always be working for you.
Key Takeaways:
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Living paycheck to paycheck ensures you have a place for every dollar to be at work for you
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Living Paycheck to Paycheck Makes You Feel Like You Don’t Have Much
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Living Paycheck to Paycheck Shifts Your Mindset to one of asking yourself tough questions before purchases
