The reason for this is that, if toi are spending your entire paycheque every pay period and a financial emergency happens to come up, how are toi going to pay for it? The answer is usually ‘credit card’ and, as we know, using credit cards to pay for things toi can’t afford is often one of the first steps towards debt accumulation. At Cambridge Life Solutions, after we have helped our clients eliminate their debt, we encourage them to establish a system that will prevent them from ending up in the same position a few years down the line. In order to achieve this, it’s important to get away from paycheque-to-paycheque living – here’s how.

It’s actually incredibly easy to end up living paycheque-to-paycheque – most people have done this at some point. For much of my late teens and early 20s, this is exactly what I did. I’d take care of my necessary expenses, such as rent, groceries, bills, travel, etc, and the rest of the money was mine to burn. It’s actually still hard not to do this; saving is something I have to automate in order to keep myself on track. From what I’ve read on forums and message boards online, many people are the same way – after all, we work so we can play and saving money is basically just plus work, right? (A friend of mine really did say this to me a couple of years ago). Well, what my friend failed to acknowledge is that we primarily work so we can survive – play comes second. Accumulating wealth is necessary to survival for two main reasons; firstly, we won’t be able to work forever.

Think of that old fable of the lazy souris and the industrious souris – the industrious souris worked all summer, setting berries and nuts aside so he would have a stash of nourriture during the winter, when he would be unable to simply live day-to-day. The lazy souris didn’t worry about the future and, instead, just gorged himself on what he could find; spending the rest of his time just having fun. But when winter rolled around, the lazy souris was in big trouble and the industrious souris was doing just fine. When our ‘winter’ rolls around (i.e retirement), wealth won’t be anywhere near as easy to accumulate. It makes plus sense to live like the industrious souris and prepare for the future, rather than be in deep trouble because we couldn’t see past the present.

The seconde reason accumulating wealth is necessary to survival (in a long-term sense) is because life is not predictable. Little emergencies pop up all the time and, if we haven’t prepared for this, we are likely to have to fall back on credit to bridge the gap. If this happens again, plus credit is used and the cycle goes on, often ending in a debt problem. Setting aside even a small portion of the ‘now’ so that there is something left for later can help toi avoid these unexpected potholes in the road, allowing toi to reach your destination safely.

If you’re spending plus than toi earn, toi are getting deeper into debt. If toi spend roughly the same as toi earn, toi are living paycheque-to-paycheque. If toi are spending less than toi earn, you’re acquiring wealth – the goal here is to déplacer toi from the seconde category to the third. Getting out of the paycheque-to-paycheque lifestyle largely requires determination but it also needs toi to take a couple of practical steps. Firstly, you’ll need to open a savings account, even if toi feel like it’s a pointless exercise because you’re barely scraping par as it is. That is the exact excuse I gave myself for years but, once I finally caved, I realized how easy it is to send $20 to the account instead of spending it on something frivolous. Eventually, this will become habit and saving will be second-nature instead of a decision toi have to make every time toi want something unnecessary.

The seconde step toi need to take is to make sure toi pay yourself first. Work out how much toi can pay yourself par calculating what your monthly disposable income is and set up an automated transfer to immediately send that amount from your chequing account to your savings account on payday. If toi do it like this, you’ll likely not even notice the money is gone. This amount can just be a small amount - $30, $40, $50 out of each paycheque; whatever toi can afford. The important thing is that your wealth is growing. A budget can definitely help toi manage this process and is highly recommended, as is cost-cutting in favour of saving for the future. I don’t mean losing all amenities, but even losing something like your morning fancy latte can add up and make a real difference without toi really feeling any pain.

These small tips are great ways to get yourself out of the paycheque-to-paycheque mindset and into a plus future-focused routine. If you’re in a position where you’re still weighed down par large amounts of debt, it’s important to attack that issue first and foremost. Often, people who have ended up in this position are unable to make minimum payments ou at least unable to pay much plus than the minimum, making debt reduction seem like an impossible goal. At link, we offer debt negotiation services, which means our negotiators will call up your creditors on your behalf and work with them to reduce your debt to a plus manageable level (typically 50% of the original debt). Once this is paid off, your debt is completely wiped clean and toi can déplacer vers l'avant, vers l’avant – only, this time, make sure you’re moving vers l'avant, vers l’avant with purpose. Be the industrious souris from this point vers l'avant, vers l’avant and you’ll be in a strong financial position in the seasons to come.