#226 - 5 Steps to STOP Living Pay-check To Pay-check

Only time you should be seeing a restaurant if you're trying to get ahead financially, if you're working in there. Don't spend like you're rich until you actually are rich. Know your exact numbers. If you don't control your cash, your cash will control you. What's the point of being asset rich and cashflow poor? You

don't need more money, you need better money habits. To get in financial shape, you have to start doing I'm Lloyd James Ross, seven-figure investor and entrepreneur, and I've helped thousands of business owners and professionals turn financial stress into success. If you're stuck in old money habits, overwhelmed by investing, or unsure where to start, this is for you. I'll give you the mindset and strategies to take control, grow your wealth, and achieve financial

freedom. It's time to make your money work for you. If you're always broke by Thursday, this episode is for you. Here's how to break the cycle and finally get ahead for good. Because let's be real, living paycheck to paycheck isn't just stressful, it's exhausting. You work hard, your money comes in, and somehow, it's gone before you can even

breathe. But it doesn't have to stay that way. So in this episode, I'm going to break down the five simple steps that will get you out of financial turmoil, get you off the treadmill and out of survival mode and into wealth building mode. So let's get right into it, okay? There's a five-step process we're going to go through and the reason we're giving you this episode is because someone from our community asked me this question this week and they said, Lloyd, can

I build wealth if I live paycheck to paycheck? So, this one is for them and the short answer is NO! So, how do you get out of this paycheck to paycheck scenario so you can build wealth which is why we are doing this episode, alright? So, here

we go. Step number one. You've heard me say this before on different episodes but I'm going to say it again because a lot of people are not listening. Ready? Step number one, know your exact numbers, because most people don't actually know where their money is going. So you gotta track your income and track your expenses. In reality, you can do it monthly, but some people need to do it weekly, because they need to micromanage exactly what's going out, sometimes on

a daily basis, because it's just that bad, all right? Because awareness is the first step to transformation. So the awareness part is where is the money currently going? Where are you sending it? Now, what it looks like is this. It looks like you're going into your online banking right now, so pause the episode, listen to this part, then go do it. Go to your online banking, go to last month's statement and download it or print it out. And go down and actually highlight what you

spent money on. And I know it sucks because you're embarrassed and you're humiliated with yourself about what you spent your money on. I get it. But unless you do this, we're just never going to change. It's a little bit like if you're going to go and lose weight and you don't stand on the scales and get shocked once. Every single great weight loss journey started with like, on the scales, holy crap, I hate my life. If that's where you're at financially, that's okay. We

need you to get that wake-up call. Right now, go and look at your bank statements, sit there and highlight all the ridiculous spending you've done this month and don't do it with any entitlement. I had a student once, she said, Lloyd, what skincare do I use? I'm like, none. Go through and see what's an absolute need and what's just a want. This will help you really unpack all these expenses that have crept up over the last few years for you. Be brutal and highlight

what parts you're going to cut. If you don't control your cash, your cash will control you. Next part, step number two. This is really important. Once you've done the first step, every time you

now get paid, You must pay yourself first. It's not negotiable. Now, this particular lesson comes from a wonderful book. It's almost 100 years old. It's called The Richest Man in Babylon. And how the man in Babylon became the richest man there was he paid himself first. How much? About 10% of all you earn. And the reason why it's 10% of all you earn is yours to keep is because you can live off 90% of your current income without it shifting too much of your lifestyle, okay? Believe it or not. And

so what most people do is they do it the reverse. They'll get paid and they'll go, you know what, I'm going to spend it on bills, tax, living expenses, and stuff. And then whatever's left over, I'll save it. That's called regular saving. It doesn't work. What you got to do is flip it and do what's called reverse saving. So as soon as the money lands, boom, doesn't matter how much it is, 100 bucks, 1,000 bucks, 2,000, whatever, take 10%. Now, 10% is 0.1 times whatever the number is.

That's how you figure out 10%. For those of you who don't know, so if you get paid $2,000, 0.1 times 2,000, you can do it on your calculator on your phone, equals $200. You take the $200, listen up, you put it into a different account. That's how you pay yourself before you do anything else. And then of course, you'll have 1,800 bucks left. then you live off 800 bucks. If you run out of money, stop spending it. Shift where you live. If

you're outspending that, it's because your lifestyle is outspending it. Paying yourself first means you then can live off the rest and that means that you're building your nest egg for the future. This is the best way to do it. You're putting yourself on a budget, zero-sum budgeting. It's the best way to do it. The minute it lands, do it. Even $50 a week builds momentum. even tender, it doesn't matter. It just matters about the behavior, okay?

So if I was on a weight loss journey and I saw myself on the scales at 110, 120 kilos, for me, I'm like 85, so that would be a lot. I would start doing certain behaviors. So I would start to go to the gym and the behaviors are the most important thing. I wouldn't expect to see the scale move much initially as long as I was doing those behaviors. And then I got to continue with those behaviors. So

the first part is not looking for results, it's looking for the behaviors. So when it comes to your finances, to get in financial shape, you have to start doing the behaviors first and then the money comes. It doesn't come and conjure up fast. So yes, put away the $10, put something. You got to move the scales somehow. It doesn't matter about the amount, just do the behavior. And over time, someone will say to you one day, oh my God, how did you get $100,000 invested? You're like,

well, you're not going to like this. I actually just took 10% of all I earned and I put it into an account and did that. Week in, week out, week in, week out, week in, week out. Same as if you lose weight. I went to the gym. Week in, week out, week in, week out, week in, week out. I changed my food. Week in, week out, week in, week out. Ba, ba, ba, ba, ba, ba, ba, ba. This is how it works. So once you've done that, what's the next step? Once

you've paid yourself first, what is the next step? This is important. So when you went through and had a look at your bank statement, you will notice there are some things you shouldn't be spending money on. And it's because we're all entitled. We've come through this incredible wealth growth in the world, and now we all feel entitled to pet insurance. We feel entitled to that particular car.

We feel entitled to... a gym membership, we feel entitled to creams, we feel entitled to that particular type of food. Well, the part of the process of step three of to cut your lifestyle creep is to have an honest conversation with yourself and say,

you know what? What if I was just to just do like the most basic human needs? What would my life look like? So let's talk about human needs. Shelter, food, water, and let's call it some basic clothing, yes? That's it. Shelter, food and water and some basic clothes. That's like it. If you have a car, entitled. Take public transport, get a lift, get a bike, ride. Then you have to worry about petrol and car and insurance. We're getting right back. If I was in financial turmoil and I had to

really skin it back, Everything would be on the cutting table. I'd probably cancel my insurance. I would cancel my gym membership. I would just put everything on the chopping block. And if you do that, then it allows you to have this conversation with yourself to justify why you do have it. So I'm not suggesting just go out there willy-nilly and do it. But I'm talking, I'm giving you permission to

really be brutal. It's a little bit like, you know, when you go after like many years, you go to your wardrobe and it's time to clean out your cupboard of clothes and you want to give them to St. Vincent de Paul or Lifeline. And, you know, you do your spring clean and you're in your cupboard and you're looking at your clothes like, oh, what should I throw out? My clothes have feelings, right? You know what I'm talking about. You've got to be brutal. Like, I haven't worn you in six months. You're

out. So it's like, what can you be brutally honest with when cutting your lifestyle? Put everything on the table. Order subscriptions, order eating out. The only time you should be seeing a restaurant if you're trying to get ahead financially is if you're working in there. You shouldn't be going on holidays. You know how many people I've coached over the years financially and they want to get ahead, they want to build wealth, and then five minutes later they go, oh, we've got a

family holiday. I'm like, what? Yeah, I know, and you can go on a holiday again, but we're trying to get ahead here. Listen, these steps aren't forever. This is how to get ahead. So just hold up on the flipping holidays, right? There'll be time for that. But what we're trying to do now is get way ahead. So cut the holidays. Cut subscriptions. Cut eating out. Cut impulse buys. Cut, cut, cut, cut, cut, cut, cut. If you've

got the Amazon app on your phone, delete it. Delete, delete, delete, delete. Eliminate, eliminate, eliminate, eliminate. OK? You get the picture. Everything's on the chopping block. Don't spend like you're rich until you actually are rich. Even then, what you'll find is when you get rich, you will learn so many behaviors you will not be able to change them. Like I don't go to a restaurant and order like the surf and turf every time. I just don't because I

just know how tricky it is to get ahead and I don't want to fall back. So that's why you'll often see wealthy people and they'll have these ingrained habits like, why don't they just buy that Mercedes and that car and buy that house and go sell it? Because their behaviors are so ingrained as to what got them there, they can't easily break them. That's what happens too when you find someone who's in physical shape. Like,

oh my God, how are you in such great shape? Because their habits have developed are so ingrained now. that they can't break them. So bad habits are hard to break and good habits are also hard to break. Over 90 days, develop some great habits in your money and they'll be hard to break, all right? You don't need more money, you need better money habits. Just quickly, if you're ready to take control of your finances but feel stuck on where to start, I

have a solution. My book, Money Bias Happiness, simplifies investing and wealth building with practical steps to help you achieve financial peace. Get your copy via the link in the show notes and let's get your money working for you. Now, back to the episode. Number four, we've discussed this on many episodes. In fact, I did a whole episode on this one topic and it was building a mini emergency fund, like

$1,000 buffer, but go for like $2,000, $3,000, really get after it. Sell things in your house. Put

them on Facebook Marketplace. I had a student of mine sell his car, downgrade. I've had many students sell property investments that don't pay off and don't pay because they're just cooked financially. There's no point having a property portfolio if you literally cannot pay for your petrol in your car the next week. What's the point of being asset rich and cash flow poor? You better have to be cash flow rich and asset poor. I much prefer that because you can then

build from there. It's very hard to build from asset rich, cash flow poor. And so the whole idea of getting your buffer and your emergency fund is so you can actually have some breathing room again. But one thing that it'll do for

you is it'll actually get you off the credit cycle. So if you've got a lot of credit card debt, the reason why that's happening is because psychologically when you pay the debt off, you feel you're entitled to then re-spend it again because you've earned the right to re-spend and so you go through this credit junkie cycle you can't get off, right? And so to get an emergency fund together means you can basically build your own credit card, but it's

a debit card, okay? And this came in very handy for me when we went to Fraser Island one day in our car and had two flat tires. I had to put the car on a tow truck and it cost me five grand to get the car back. What if I didn't have the money? The car would still, well, the car would be in the sand in the ocean on Fraser Island and that would be bad. So it can definitely come in so handy because emergencies happen and you just don't know when, right? So no more credit card panic.

I want you to have your own debit account. Emergency fund, all right? Cash cushion, breathing room. Step number five, increase your income. When's the best time to increase your income? Yesterday. When's the best time to plant a tree? 20 years ago. When's the second best time? Today. Same with increasing your income. In fact, I will say this, the best time to increase your income is when you don't need to. So I look back on my own journey when my wife and

I were both working jobs. We didn't need to have a side hustle, but I like to play 4D chess. I like to actually think ahead. And I just thought to myself, you know what? We are both working. We have capacity in the evenings and weekends. We can develop our third income. And so we didn't need to, but I thought one day in the future, we may need that because I know the world is full of ups and downs and uncertainties. So

with that in mind, we started a side hustle and we worked at it when we didn't need the money. It's easier to build a second income when you don't need it than it is when you need it. And here's a great example. There's a biblical story with Noah and the ark. The story goes that Noah, you've probably heard of it before, it's a very popular story, but Noah started building the ark 70 years before the floods, like 70 years, think about that. And so people were like, why

is he building this ark? It's not even raining. That was the best time to build the ark. What do you think? The best time to build an ark is when you flip it in the ocean? What are you crazy? No, the best time to build your ark is before it rains. And what I found interesting was when COVID hit and all of a sudden people were locked in their houses and had no income, they go, Oh, it's raining. Oh, I'm going to start building an ark. Too late. But I know some of my students that

started building an arc three years before then. Guess what? When they lost one student, when she lost her teaching job, she had her side hustle she'd built three years before, she had her arc. She was floating fine in the rain. So the best time to start your second income or build something is today, today, today, today. Because one day, you'll flip and need it and you'll be bloody thankful that you listened to this episode and

got after it. Now, don't stop. That side hustle we created in 2014 when we didn't need it has now produced over $2 million in profits and amplified our portfolio to produce more money that we still don't need. Because one day, we'll need it. I promise. The world's changing fast. Get in front of it. So you can start with, ask for a raise at work, extra income. Start a side hustle, extra income, and make sure you're always investing

in new skills because extra money, extra money. I know this sounds really competitive. I know it does. You're like, oh my god, this sounds really hard. Life is pretty hard. It's very competitive and it doesn't stop. If you feel like you're just trying to stay ahead all the time, because you do. The ones that stop, the world goes past them and they just get cooked. They do. Don't get cooked. Stay ahead of it. $200 a

week can completely change everything. You don't have an income problem, you have an income ceiling to break. Every single income that's stuck is unstuckable. You don't have to keep living on the edge. These are the five steps that aren't magic, it's just what works. So track your money, pay yourself first, cut the noise, cut out the expenses, most importantly, back yourself, increase your skills, increase your income right when you don't

need it, you need it. You deserve more than just getting by. Take control, start now, build the freedom you've been working for, and I'll see you in the next episode. Thanks for listening to Money Grows on Trees. If you enjoyed the episode, leave a five-star review on Apple Podcasts and Spotify and subscribe to us on YouTube so you never miss an episode. And if you're serious about building wealth, make sure to check out the links in the show notes and follow me on all social media platforms, at