"The hardest thing in the world to understand is income taxes" -Albert Einstein | 281-210-2450 | INFO@CORREAPEARSONANDASSOCIATES.COM

How to Break the Cycle of Living Paycheck to Paycheck

Date: May 5, 2022

How to Break the Cycle of Living Paycheck to Paycheck

Many business owners struggle with cash flow and budgeting. It may seem impossible at times to break the vicious cycle of living paycheck to paycheck or just making ends meet. It can be difficult to know whether or not you can afford to eat out for dinner or buy something you saw and wanted but didn’t necessarily need. Too many business owners rely on ‘Bank Balance Accounting’ where they judge their purchases based on the balance in the checking and savings accounts. This approach kills thousands and thousands of small businesses every year. It doesn’t take future cash flows into consideration and doesn’t give you the ability to properly allocate your finances in the areas they are needed the most. Thousands of individuals and business owners alike have completely revolutionized their finances by following general best practices they never knew they didn’t know.

Here are some useful tips to help you leverage your bank accounts to work with you instead of against you. Whatever it takes, you have to break the old cycle so the new one can emerge!

A simple way to combat this is by getting strategic with your checking accounts. You can start by creating multiple accounts with designated purposes, (click here for free resources about the Profit First System). The idea is to separate all recurring essential expenses (like rent, utilities, phone payments, insurance) from spending expenses (such as going out to eat, entertainment, etc.) and savings accounts. It takes our behavior into consideration when laying out a process to manage your finances in a way that is conducive to future growth, wealth, and happiness.

Another way you can start to break free is to open a savings account and utilize an automatic transfer from your checking to your savings every month. You generally won’t spend what you don’t see and you’ll naturally learn to replace the income or cut the fat. Whether you’re contributing using investment vehicles like 401(k) or IRA accounts, or setting funds aside in your savings account with your bank it’s important to make sure you’re earning compound interest on your investments. Tempted to transfer from the savings back to your checking? Consider opening a savings account outside of where you have your checking accounts. Check different banks to see how many transfers and withdrawals are allowed monthly and find a good fit for you. If you remove the temptation by making it time intensive to withdraw, you’ll naturally find better options to avoid the extra time and effort required to access the funds you’re saving.

Lastly, track everything and if your bank offers balance alerts, turn them on. Some banks also offer budgeting alerts – you will get a notification when you have exceeded a certain set budget. Find what works best for you and stick with it. We are here to help you, feel free to reach out for a complimentary session to see how we can help you save.



Follow Us:

Begin Understanding The Bigger Picture:

Would your business benefit from partnering with a team of financial experts devoted to your success?

Take the first step and schedule an initial meeting to learn how we can help you transform your business and achieve your goals.