Do THIS As Soon As You Get Paid | How To Manage Money Like The Rich

For the millions of Americans who work anine-to-five job it's not Thursday or Friday that's the best day of the weekno the best day of the week is payday but sadly many people make criticalmistakes when that special day comes around and miss managing your paycheckis one of the reasons

why so many Americans are currently living paycheckto paycheck luckily boss in this video I will sharewith you exactly what you should do as soon as you get paid and if you're newto the channel then hit the subscribe button below for more life-changingcontent I'll be the first to admit

that getting paid feels absolutely great butunfortunately many people simply have no idea what to do with their money whenthey receive it and as you probably guessed without a plan this more oftenthan not leads to the money being spent on frivolous items but even with abudget in place proper

spending can be tough according to a new poll Americansadmit to spending seven thousand four hundred twenty nine dollars and twentyfour cents over their budget every year in fact the research found that we'llonly three in four Americans or 74% say that they have some type of budget 79%of those

still hub troubles keeping themselves within their own parametersdespite their best efforts sadly over half of those polled say they even havea meticulously planned out budget but still Americans spend a hundred andforty two dollars and 87 cents over budget each and every week altogetherthe average weekly budget of those

polled equates to one hundred ninetyseven dollars and 31 cents but that number it turns out is optimistic efestin reality Americans surveyed spend closer to three hundred forty dollarsand 18 cents every week which explains why only ten percent of the surveyrespondents were able to say that they think sticking

to a budget is easy wellAmericans are clearly overspending each and every monthanother problem is what they are spending their money on the averageadult in the United States spends a thousand four hundred ninety sevendollars a month and on essential items according to a recent study all toldthat's roughly eighteen

thousand dollars a year on things we can all do withoutand that's a lot of money considering the extent to which Americans areletting their savings and other crucial goals fall by the waysidethe top three non-essential expenses that are crippling these savings effortsAmericans include eating out at restaurants buying drinks

and orderingtakeout as you can see there is a lot of progress that can be made when it comesto the management of money in the United States and one of the first steps tobetter financial health is having a reliable plan that you can use when youget paid given that

many people either don't have a budget in place or don'tfind the one they use effective I want to start from scratch when explainingexactly how you should allocate your money when you get paid and later inthis video I will go over three money management tricks I use every month

toensure I hid my money goals when you get paid it is important to allocate yourmoney towards the different types of financial commitments you have and onemethod I recommend people use is the percentage model if you're unfamiliarwith the percentage model it is essentially a breakdown of where yourincome should

be allocated on a monthly basis the percentage model is split intofour categories saving variable expenses fixed expenses and housing while housingis usually a fixed expense given that it makes up a significant portion of theaverage person's total monthly expenses I find a bed and fishel for it to haveits

own category in the model now in order to use this money management toolproperly you need to understand what cost should be incorporated into each ofthe four categories so let's first start with savings your savings category willinclude contributing to your savings or investment account paying down debt orsupplementing your

emergency fund until you've achieved anywhere from six monthsto a years worth of a reserve of living expenses as you will see this categorymakes up these smallest proportion of your income allocation however it is byfar the most important you see the other three categories require you to expendmoney on

items that will keep you afloat on a day to day basis but moneyallocated to your savings category helps you improve your financial situation byreducing interest payments or helping or else grow by investing more money intoyour investing portfolio the next category includes your variable expensesand this can include anything

from food and drinks gas and clothingnow as I already mentioned Americans spend a lot of money on non-essentialitems and this is the category that is responsible for these unneeded purchasesas a result it is imperative to stick to the amount you've set up for yourselfwhen spending money on this

category every single month the third categoryare your fixed expenses and this includes things like your car paymentutilities bill and life insurance as you can tell by the name these are the typesof expenses that don't very much by month which certainly helps when keepingthe money spent on these items

under control the final category in thispercentage model is housing for the majority of people this cost exists inthe form of either a rent or mortgage payment and while you would think thatsixpence would be hard to mismanage the mistake actually takes place before youever spend a single dollar on

this type of expense you see so many people takeon a more expensive apartment or bigger home than they need which can then leavethem cash-strapped trying to afford the monthly paymentsbut just how bad is the situation gotten overtime study suggests that the medianfootage of a new home is now

2687 square feet which is an increase of nearly athousand square feet in the last four decades on the flip side the averagehousehold size meaning the number of people living in the home has actuallydecreased from three point zero one persons per household forty years ago totwo point five for

today this is all to say that there is a lot of space beingwasted which ultimately means wasted money now that you have a good grasp onthe four categories of the percentage model you need to know how much of yourafter-tax income to allocate to each of them every single

month the model Irecommend is the following fifteen percent will be put towards savings 30percent towards variable costs thirty percent towards fixed expenses andfinally 25 percent towards housing now these percentages may vary over timedepending on your money goals but for someone just starting out in theirjourney to better financial

health these percentages will work for the majorityof people from my personal experience using the percentage model is a reliableway to ensure you make progress towards your financial goals each and everymonth but I will admit that it does take quite a bit of ongoing effort for methis effort meant

spending less time making money which is why after usingthe percentage model for awhile I decided to hack the system to make it ashands-off as possible here are three ways I made this money managementtechnique nearly effortless step one open up the right accountsthe first step in simplifying the percentage

model and automating yourfinancial management process is opening up the right accounts when using thismodel most people will operate out of a single checking or savings account butdoing so only adds to the effort you will have to spend on a monthly basis tomake the strategy work besides the standard

checking and savings accountswhere you store money you want to save you will want to open an emergency funda debt repayment account and an investing account so that all theelements in your savings category are covered number two set up automateddeductions in the United States eighty-two percent of workers are

paidvia direct deposit and if you make up this majority then you are definitelyable to leverage the power of automated deductions to be frank one of the bestthings I have ever done for my finances was setting up automated deductions formy pay with my employer in essence what these deductions

allow me to do isdivide up my paycheck and send portions of it into their respective accountswhen I initially set up this process I allocated 5% of my after-tax income tomy savings account 5% to my investment account and 5% to my emergency fund nowas they have earned more money

and have fully funded my emergency fund I nowsplit that 15% between my savings and investment account and once you begin toemploy this technique in your own financial management plan you willrealize that over time you will need to allocate your income where your moneycan be best used now I

think this automation technique works for so manypeople for two main reasons first it allows you to pinpoint exactly how muchyou want to save and invest as long as you set up the deduction percentageproperly you can rest assured that you will be putting the correct amount ofmoney into the

respective accounts every month second using automated deductionsremoves the need to constantly think about your finances and in my case allowme to focus on other important things like improving my skills in order tomake more money so in order to streamline part of your finances youshould definitely be leveraging the

power of automated deductions numberthree automate bills and credit card paymentspaying bills is a drag but trying to remember to make timely payments onlyfurther adds to the pain as such you should also use the power of automationto ensure your housing variable and fixed expenses get paid in full andtime

now there are two ways you can set up automated bill and credit cardpayments the first is to have creditors automatically draw out the bill balanceevery month from either your checking or savings account since you probablyalready have one of these two accounts open all it will take is a

few calls toyour service providers and then withdrawals will start on their own thesecond option is to open up a bank account specifically for bills thisapproach has both pros and cons the benefit of this approach is that itmakes reviewing the bill amounts easier since the account has been set

upstrictly for this type of expense however the con is that you can riskgoing into overdraft and incurring banking fees as a result you see if thecreditor goes to pull a payment and you don't have adequate funds in thataccount your bank will cover the withdrawal amount and then charge

you afee for doing so this likely won't happen when routing the deduction fromyour savings account since that's where a large chunk of your free cash will bebut it doesn't mean that you should forget about using a bill paymentaccount to mitigate this risk when you first open your bill

payment account putin one to two times your normal monthly expense amount instead account whilealso ensuring that you have set up a regular paycheck deduction with youremployer to cover the ongoing withdrawals over time once you havethese three steps in place adhering to the percentage model becomes a thousandtimes easier

but there's one final point that must be discussed when it comes tomaximizing the benefit you realize from using this money management techniqueone thing you must be aware of is that just because you have set percentagesassigned for your for spending categories doesn't mean they can't beadjusted to suit your

changing financial goals for instance if you can lower yourmonthly housing costs or eliminate your car payment there's no need to stillspend as much money on that financial category my recommendation is to funnelas much as you can into the savings category which can be in the form ofsavings or

investments ultimately the more money you can allocate to thiscategory and reduce the other three the better off financially you will bethanks for watching if you want to go from the life you have to the life youdeserve then hit the subscribe button now you