DO THIS With Each Paycheck

[00:00:00]Ah, there's no better feeling than payday. Your banking app pings you with the notification of joy. You live like royalty for 48 hours and then you're broke again. But the problem here isn't that you're bad with money. You just don't have a system. So today, I'm giving you that system. A simple sixstep payday routine that takes less than 20 minutes. My name is Guy and I'm part of the Bureau, a team of specialists who've helped millions of people take control of their money. I'll show you exactly what to do every time you get paid to really grow your money. And the last tip could surprise you. As someone who used to elevate blowing their paycheck into almost an art form, I can tell you that getting a good system in place is one of the best things you can do. So, let's get on with it. Right. Imagine you've just been paid.

[00:00:56]You've paid your rent. The fridge is stocked up, and all your bills are covered, but you still have some money left over. So, you treat yourself to a $50 meal. The credit card gets tapped for a $100 pair of shoes, and then the weekend happens. Before long, your bank accounts empty, and you're retracing your steps, wondering where the hell it all went. This was very much a pattern for me when I was younger, without the shoes, though. And it meant I spent most of each month with money worries always in the back of my mind and a permanent overdraft into the bargain. So start here. You need to know exactly what lands in your account and exactly what leaves it. Because here's where people make their biggest mistake. They budget off the salary in their contract, not what actually hits their bank. Just because your salary is $50,000 a year doesn't mean you actually take home $50,000 before you even see your money.

[00:01:58]Deductions like income tax, social security, health insurance, student loan, etc. all take a big old bite out of it. If you're US-based, then depending on what state you live in, you're more likely to be left with somewhere between, say, $ 38,000 and $42,000 a year out of your $50,000. And of course, things get even trickier if you're a freelancer or if you're self-employed because your income can vary from month to month. Whatever the case, though, the point is that you simply can't make any realistic budgeting plans based on what you expect to earn as a gross salary. You also can't just guess what you'll have left after everything else is paid for.

[00:02:42]That's why step one is to create a monthly budget tracker. Now, these are easy to set up in Excel or Google Sheets, and there are plenty of free templates you can use. Start by entering your income after deductions. Then, list your outgoings. Ideally, you should be able to group them into four categories: fixed bills, debt, subscriptions, and variables like shopping or fuel. Your tracker should total everything and show what you have left for the rest of the month. Whatever you do though, don't build your budget around your best month. If anything, plan as if you're expecting a bad one, either by underestimating your income or rounding up your expenses. Expect to get paid $4,200, budget for $4,000. Spending $250 a month on food, call it $300. That way, you're forced to work with what's on paper and end the month with more than you planned for. So now you enter the month with more than you expected and not less. But a budget that's perfect on paper falls apart the second life throws something at it. And it will. That's exactly what step two protects you from. Nearly 4 in 10 Americans cannot cover a $400 emergency expense out of pocket using solely cash or existing savings. Just one unexpected expense, say a car repair, a broken water heater, an emergency dental appointment, whatever it may be, will throw everything off completely, especially when you have no idea how much those things might cost.

[00:04:22]Well, at least not until it actually happens. But by that point, it's already too late. A sudden $1,000 bill is exactly what pushes people onto a credit card at 25%. And that's the spiral. One bad month becomes months of debt, more stress, worse decisions. So, the emergency fund keeps you out of all this. There is one single thing you can do to help ease your money worries in a big way, and that is to build your cash cushion. So, every single payday, make sure the first thing you do is move some money into a separate savings account.

[00:05:00]Even if it's just $25, the amount matters less than the consistency. Now, the goal here is to set up an automatic transfer to happen the same day your salary hits before you've even seen the money. Out of sight, out of mind. And by the way, if you're enjoying the video so far, then show it some love by pounding those like and subscribe buttons. And you can get even more value from Money Bureau simply by signing up for our free weekly newsletter. Just click the link in the description below or scan this QR code. Now, an emergency buffer stops the bleeding, but it doesn't make you richer. Step three, though, is where you start winning money back by tackling any debt that's actively making you poorer.

[00:05:44]We're talking things like credit cards, payday loans, and overdrafts. These are all different forms of debt that have one thing in common, high interest rates. Think of highinterest debt as the opposite of investing. When you invest, your money grows over time. When you carry expensive debt though, your outgoings increase and your money shrinks over time. Having a credit card charging 25% interest is honestly one of the worst financial positions you can be in. Every month you carry that balance, you're quite literally paying to be in debt. So, let's be strategic. Make a list of all the debts you have and sort that list from highest to lowest interest rate. Throw as much money as possible at the highest interest debt first while making minimum payments on the rest. And this is a smart financial technique called the debt avalanche. So, the first debt may take a bit longer to pay off, but once it's done, you can use the freed up capital along with the money that you were throwing at that debt to pay your second one off much faster and so on. The momentum of your repayments builds up just like well, an avalanche. And if you want to see other ways to become totally debt free, then we've got you covered because we have a whole video showing you how to get out of debt, which you can find right over here. All righty. Clearing debt is how you stop losing money, but it doesn't necessarily help you earn more. So, step four is where you go on the offensive and turn the $200 you saved into $2,000.

[00:07:27]And to do this, you need to make sure every payday without fail, a slice of your money goes to building wealth automatically. Because if it's not automatic, it probably won't happen.

[00:07:40]Now, for our American viewers, your main tools here are your 401k, a Roth IRA, a traditional IRA, and a health savings account or HSA if you have access to one. Around 70% of private sector workers now have access to a 401k style plan. And many employers also offer matching contributions. And if yours does, you're in a very fortunate position. It's basically a boost to your returns. It's free money. And there's nothing better in finance than free money. So once you've captured any match, a Roth IRA is often your next best move. That's because Roth IAS allow your money to grow tax-free and you can withdraw it in retirement without owing a penny in tax. But for those of you who don't live in the US, you'll have your own versions of this depending on where you are. For example, in the UK, that's your ISAs and pensions. In Canada, it's the registered retirement savings plan and your tax-free savings account. And in Australia, it's superanuation, where employers are required to contribute a portion of your income. Whatever they're called in your country, these accounts exist to help you build wealth with tax advantages. So, make sure you're using them. And for those who've maxed out their tax advantage options, making regular investments should be your next step. Your goal here is simply to beat inflation. And you can base your investments on your own risk tolerance.

[00:09:16]So if you want safe, steady returns with very little risk, then government treasury bonds currently give you a return of around 4.5% per year over 10 years. If you're looking for higher rewards, you need to take on more risk, though. Many people invest in the S&P 500 index, which is basically a way to invest in a slice of America's biggest and most important companies. Relative to other investments out there, it's fairly low risk and has historically grown by roughly 10% per year on average. Food for thought. Still, the amount matters far less than the habit.

[00:09:53]$50 or £50 a payday is a real start.

[00:09:56]Bump it up 1% every time you get a raise. Automate it for payday and your wealth builds while you forget it's even happening. But there is one blind spot that wrecks even disciplined people every December and most don't see it coming. So step five is how you kill it.

[00:10:16]It's the step that almost everyone skips and then wonder why they're stressed every Christmas, every insurance renewal, every school trip. The fix is to fund those moments now before they land. And if you're thinking, well that's basically the same as the emergency fund, then you're almost right. But here's the thing. Most surprise expenses aren't really surprises at all. You know that Christmas happens every December. You know when your dad's birthday is. Well, at least you should. You know when your car will need a service. The only thing that makes these feel like emergencies is that you didn't plan for them ahead of time. So, the solution is called a syncing fund. A syncing fund is just money you set aside on a regular basis for a specific future expense. Then the thing that separates it from an emergency fund is certainty. You know what the syncing fund is for and roughly how much you'll need. Syncing funds are actually quite easy to set up.

[00:11:17]Basically, you pick the categories that apply to your life. Holidays, Christmas, car maintenance, home repairs, annual subscriptions, school costs, weddings, or whatever else. and you put a small amount towards each one every payday.

[00:11:30]So, let's say you want to spend $1,200 on Christmas this year. Well, some quick maths tells you that if you put away $100 a month every time you get paid, you'll be covered. So, you move that $100 into a pot labeled Christmas every payday and don't touch it. Then, when December arrives, you won't need to stress out about where to find $1,200 because the money is already there. No credit card needed, no post Christmas debt spiral. Most modern banking apps let you create multiple savings pots or buckets, which allows you to set up a digital envelope savings system. Now, for context, envelope savings are, well, exactly what they sound like. You save physical cash in envelopes with each envelope having a different label. It's a savings method that's been used for decades because, well, it's simple and it works. But replace those envelopes with pots in your banking app and this system becomes entirely digital which we think is much more convenient. Next, give each pot a name and a target. The naming matters more than you think here.

[00:12:37]Holiday fund feels intentional. It's money with a purpose, not just a number in an account. Do this and the big stuff turns into small, manageable payday contributions and the anxiety of being blindsided disappears. Which brings us to the final step, the one I said might surprise you. Because after everything you've just done, step six is the opposite of restraint. It's permission to spend. Yes, really. Once you've topped up your emergency savings, paid down your most expensive debt, set up automatic investments, and funded future expenses, you're already ahead of the game. You've covered all your most important commitments and whatever cash you still have in your pocket is yours to enjoy. There's no need to feel guilt, no need for second-guessing, and no mental gymnastics trying to figure out how to make ends meet. You've already taken care of everything else. The rest is spending money. Many people assume that having a financial system means constantly denying yourself luxuries or anything that brings you even an ounce of happiness. Well, it doesn't. In fact, the whole point of the system is to introduce flexibility and bring genuine improvements to your lifestyle. So, when you know the important things are covered, you actually get to enjoy your money without the constant anxiety. So, that fancy restaurant you've been walking past for months, go right ahead and reserve a table. Fancy a new pair of trainers? Treat yourself. Spontaneous weekend away with the other half? Book those tickets. That is the beauty of this system. You've already done the work and the system handled the important stuff before you even opened your wallet. This is why the order of the steps we outlined in this video matters so much. If you spend first and try to save what's left, you'll usually just end up spending more later in the month. Spend without an emergency buffer and you'll be stressed to the max when your car breaks down. Leave those debts unattended and they'll eat away at your budget and your sanity. But if you handle your priorities first, you build wealth automatically and end up with more money to enjoy life in the process.

[00:14:52]So, let's quickly run through the routine one more time because this whole thing takes less than 20 minutes on payday and then you're free to go and enjoy yourself. So, step one, check what actually came in, your net income after everything's been deducted. Step two, move some money over to your emergency buffer. Step three, make a debt repayment. Step four, automate your finances to make regular investments.

[00:15:18]Step five, top up your syncing fund for those known future expenses. And step six, spend whatever you have left, however you want. And that's it. Six easy steps.

[00:15:32]Do this every payday and in just one year's time, you'll have a decent emergency buffer, far less debt, and actual investments compounding in the background, all without feeling like you're constantly restricting yourself.

[00:15:46]You don't need to perfectly optimize everything to achieve the financial future you want. You won't always get the amounts right, and life will undoubtedly throw a few surprises at you along the way. But that's okay. Your new system keeps working even when things get messy because the important moves happen automatically before you make any decisions at all. That is how you build your financial future.