Whenever you receive your salary, do this

Once again, we’ve reached the beginning of the month and, unfortunately, what happens to many people is this:

They get their paycheck one day, pay the bills and 1 week later, there’s nothing left.

In many cases, these people insist on looking for external culprits.

One of their main excuses is as follows: 

“My salary is low, so there’s never anything left over to invest in”.

But investing isn’t about having money left over. You have to learn to use your money wisely, so that you are able to pay yourself first and then pay others.

Understand what this means by checking out the following content.

For those who already have their finances in order

A common goal for people who are already financially organized would be to achieve financial independence.

These people are already financially free because they don’t depend on work to support themselves for a certain period of time, they don’t have debts, and they are able to invest some amounts each month in order to achieve goals that are already fixed in their minds.

If you don’t fit into this group, don’t worry. Below we’ll give you the best tips for finally reaching this level.

However, if you’ve already organized your finances, the first thing you should do is:

Pay yourself first

This means that after you receive your salary, you set aside the money you are going to invest.

This money should be divided into three parts, taking into account your short-, medium- and long-term goals.

For example, you should set aside the money you would like to invest in a dream trip or to buy that new cell phone you need so badly (short-term goals).

As for medium-term goals, we could mention going on a more planned trip (to see different countries, for example), getting married or buying a car.

Finally, when we talk about long-term goals, we are referring precisely to buying a property or achieving financial independence in order to finally start living off a passive income.

Note that your main long-term goal must be linked to your retirement, i.e. the way you will live after you have spent your life working.

Therefore, if you have to prioritize some kind of investment, it would certainly be this one.

A key tip for anyone working towards short, medium- and long-term goals would be to invest in different options.

You should diversify your investment portfolio to ensure that it is a success.

What to do when you receive your salary – for those who still need to get organized

For someone who is used to living life without financial planning, has a lot of debts and at the end of the month doesn’t have a single dollar, organization is needed.

If you’re not organized in your finances, you won’t be able to invest money consistently every month.

In this way, they always remain stagnant and fail to achieve their goals.

If you think you’re in this group, there is a solution!

With discipline and patience, you’ll soon be investing in achieving your dreams.

Note that here it’s not enough to simply tell you:

Pay yourself first, i.e. make your investments before dealing with your monthly bills.

For example, let’s say an individual receives a salary of US$2,000 and decides to start investing US$300 a month.

Then, at the beginning of the month, despite not having planned financially, he follows the tip above and first chooses to invest the desired amount.

The big problem is that, due to a lack of organization, he was unable to deal with all his debts and bills, with just $1,700.

As a result, he is forced to withdraw the amount he had invested in order to pay some kind of bill.

If this has already happened to you, unfortunately, it will continue to happen if you don’t organize yourself financially.

Now let’s imagine a second scenario together:

The person is in debt, but despite this, they have managed to organize their finances and have US$200 left in their account.

Instead of thinking about where they’re going to put the money, they think about the following:

There’s a lot of money left over this month. Where can I spend it?

Organize yourself financially by doing the math correctly when you receive your salary

In order to manage your salary in the best possible way, the first step is to understand how much you receive and how much you spend.

When it comes to spending, it’s not enough to do the math in your head.

In other words, you think you spend US$700 on rent, about US$50 on electricity, about US$35 on the internet and probably US$400 on groceries.

When I say that you should make a monthly budget, that’s not what I mean.

If you are totally uncertain about your spending and don’t even consider how much you spend on the weekend when you go out with friends, you need to change.

Use pen and paper, cell phone notes or a finance app.

List absolutely all your expenses. Everything from rent to the coffee you buy every day.

If you do the math in your head when you get paid, you’ll miss out on a lot.

Thinking about expenses differently

It’s also interesting to think of expenses as a percentage of your income or number of hours worked.

If an individual is paid US$2,000 and spends US$400 going out with friends every weekend of the month, that means that 20% of their income is being spent on this.

And when you do a simple calculation, this individual spends 32 hours or 4 working days of his month just to pay for his outings with friends.

That’s if you consider that they work 160 hours a month (8 hours a day, 5 days a week and 4 weeks a month).

So you might think: well, the person does work to enjoy it. I don’t see a problem with that!

In fact, we spend our money in the way we prefer when we receive our salary.

But when the future knocks on your door, it’s no use complaining that you haven’t been able to achieve your dreams because of a lack of opportunity.

If you know you’re using your money inappropriately, and you’re so adamant about continuing down the same path, you’re taking a big risk.

Learn to be aware of your spending.

Is it really worth spending ⅕ of the month you work to pay a bar or restaurant bill?

Know how much you have when you receive your salary

Do you know exactly how much goes into your account every month?

Here again, it’s not enough to kinda know how much you earn. You have to know exactly.

For those who work a month and receive a fixed salary, this is simple.

And for those who are self-employed, I need to give you an essential tip:

Have a fixed salary.

You’ve probably heard many self-employed people say:

I don’t know how much I get paid each month because my earnings vary.

Some months I get US$4,000, others I get US$1,000 and one month when sales were very good, I got as much as US$10,000.

So my expenses are variable.

And why does the amount of money the self-employed person receives vary so much from one month to the next?

Because at the end of the month, they think that what’s left in the company is their salary.

This is a very serious mistake that many people make when receiving their salary!

If you have your own company, be organized and set limits for your salary.

Simply set a fixed amount that you will receive each month.

It may be that in December, your company made 10 times more money, but that doesn’t mean your salary should be 10 times more.

Never take all the money you’ve made from your business to raise your standard of living.

The first step is to invest in your company so that it can grow.

There’s little money left, now what?

Once you know exactly how much you earn and exactly how much you spend, you may find that you have little money left over.

In this case, you have two options.

First, consider lowering your standard of living when you receive your salary.

Check your monthly expenses, both fixed and variable, and see what you can cut back on.

There are people who say their salary isn’t enough, but if you look at their spending, it’s not adequate.

If they insist on dining out every Saturday night at a fancy restaurant in town, there’s something wrong.

Insisting on wearing designer clothes or buying the car of the year doesn’t make sense either.

If you’re on a tight budget, maybe it’s time to take a step back.

Having dinner with friends at home more often and preparing the meal yourself, buying clothes in traditional and more affordable stores and buying a cheaper car are not a sin.

Never be ashamed to take a step back after realizing that it’s not yet time to enjoy certain things.

It’s better to take a step back to organize your finances and then take two steps forward than to insist on making a mistake.

Remember the lesson from the book Rich Dad, Poor Dad?

Rich people invest in assets, while poor and middle-class people insist on investing in liabilities.

If you really want to become financially independent, learn to live the right standard of living.

But if you’ve really cut back all you can, you should move on to the next tip:

Receive your salary – earn more money

There are people who are totally outraged when they hear or read this phrase.

They have a busy life, they work more than they should, they take care of children and the house.

That’s why they think I don’t have time to make extra income.

The overall screen time of Americans is 4 hours and 25 minutes a day.

In 2022, the figure was 2 hours and 54 minutes.

This shows us a bit about where we spend our time.

There are people who say that 24 hours a day isn’t enough, but what do they do with their time?

No one works 24 hours a day and by starting to use their time more wisely, anyone can work at least 1 hour a day to make extra income.

If you work 1 hour a day from Monday to Friday and manage to use 5 hours of your Sunday, that’s 10 hours of extra work.

During this time, you should mainly seek knowledge in order to earn the salary you want.

Develop skills and specialize in a certain area to earn more money.

Ideally, keep in mind that extra income means extra work.

So, instead of spending all your free time on social media or other activities, dedicate yourself to something new.

For those in debt

There are different types of debtors.

The first is someone who has credit card debt, a loan, a mortgage and so on.

However, despite paying a lot each month, this person has everything on track and manages to pay for everything on time.

In this case, the best thing to do is to keep paying your debts on time and be very careful not to let your spending get out of control in a few months, causing your debts to snowball.

And of course, for those who find themselves in this situation, when you finally finish paying off the debt, don’t take on anymore after you receive your salary!

For example, if you’ve spent the last year paying installments on a new car and next month you’ve paid off the debt, why are you planning to buy a newer car and acquire another debt?

There’s no point in continuing to pay installments on a car, house, cell phone or any other product for the rest of your life.

Debtors who can’t pay off their debts

The second type of indebted person is the one who has a lot of debt, and it’s out of their control.

Every month their paycheck is 100% committed to debt and what’s left over is barely enough to survive on.

This causes them to delay paying their bills and interest rates to rise even higher.

In this case, you need to save money to pay off your debts.

Although it’s not ideal to get rid of all the expenses in your life and stop even having coffee at the bakery next to the office, this is an extreme case.

So if you find yourself in this situation, cut everything you can.

When you receive your salary, as well as cutting all your expenses, do your best to earn extra income in order to save money and pay off the debt on time.

That way, you can get a huge discount.

Here’s just one thing to clarify:

For people who have high debt and get a cash discount, this doesn’t mean that they borrowed US$10,000 from the bank and will only pay back US$1,000.

This only happens if your original debt was US$1,000 in credit card charges, for example.

This type of debt becomes extremely high due to interest rates.

So don’t spend too much on the card or take out a loan, hoping that in the future you’ll get a huge discount that will solve all your problems.

Final tip to consider when receiving your salary

Once you are 100% financially organized, knowing how much you earn and how much you spend, you can make it a priority to invest as soon as you receive your salary.

For example, if you earn US$3,000 and want to invest US$800, you can decide where to allocate the money.

If your main investment is for the long term, to ensure your peace of mind in retirement, you could allocate US$500.

For short- and medium-term goals, you can put the rest of the money in there.

Finally, remember that if you’re in debt, there’s no point in skipping parts of the process by investing first.

Get your finances in order so that you can invest consistently every month in the future.

Daniel 6 de September de 2024