Pandemic Paper: Check Your Paycheck
While we have been in a recession since February, the rest of the world has been giving us cliff notes of what to expect. I mean look at China giving us the tea via social media about what the ‘future’ could look like for us. Countries like Singapore are experiencing a sharp decline; so could this be what we are to experience stateside? Within the media have been comparisons between - The Great Depression, Swine Flu, The Recession and our current situation. For The Culture, we are dealing with the 3Ps: Politics, Police and a Pandemic. That is A LOT! Even with all of this going on, Americans are even more focused when it comes to paying down debt. Love to see it!
When it comes to understanding how to start stacking your cash and snatching debt, you have to know what you are working with. Intentions without implementation is just a simple wish. Curating a wealth plan is all about honoring where you are, your habits and how to move. One of the ways to know where you are is to understand your income and outcome. You can’t make a budget or expense plan without knowing your numbers. Let’s talk about 3 core point of understanding your paycheck -
You work hard for the money (well some), so you have to know how to werk it as well! One of the ways to do so is to understand your paycheck. From stub to spend. Every year you should do an audit of your paycheck to make sure that you are bringing home the most coint as possible. One of the biggest snatches within your check is your taxes and retirement. How you play with those numbers determine how much gets placed into your account. Yes, other things like HSA/Medical and nem play a part in the play, but taxes and retirement are those areas that many people either don’t play close or pay attention to. Depending on your state, your W-4 makes the coints reflect on your W-2. Every year, our friends over at the IRS updates guidelines when it comes to the W-4. Doing a check (and even checking in with HR) will help you get the most out of your checks. Allowances can be annoying, but knowing that you are getting the most will allow you to do the most. I will pick right up with the next level of your check in a second, Fam.
Refine your retirement. I had a session at the top of the year with one of my clients to help them gain the most from their allowance within their retirement contribution. Nih, I will say if you aren’t matching - it is NOT the end of the world. That leap can scare some people like the checkout at your favorite store. Depending on the landscape of your employer - you would either have a 401K, 403B or IRA (Roth/Traditional). With you knowing what you have and how it is TAXED determines how your contributions should flow. Playing around with your allocations will help you to determine on pay out an allowance to what fund you have within your retirement plan. Slowly scale yourself to reach match. If you can’t hit it, don’t quit it. Bit by bit. Don’t be afraid to call the service desk to ask their opinion of your holdings (retirement funds). Plus, create a watch list of your retirement fun to be able to learn your funds and keep up with them without fainting if the market goes down. You do know that your retirement is tied to the markets? (Psst, you are already investing if you have one).
Flipping back to your check. Now that you have your taxes and tings in order, we have to formulate on making sure your check lasts longer than paycheck to Monday. Doing an audit of your wallet will help you see what your spending pockets are. These buckets will look different to everyone during the audit process. But while you are working through your bank statements, look at what statement you are making with your money. What do you spend the most on? When you determine that, configure how you can scale the expense of the experience. For some it would be their rent/mortgage/bills, for others it will be the Nike SNKRS App. Unlike other Finance people, I will not tell you not to experience life (LIVE). I will tell you to expense the experience. Do it within scale and don’t pull a what the hell (YOLO).
After you have done an audit of your wallet, I want you to place each of your expenses into the three categories above - Bill, Build, Blow. High level, this is what the 3Bs stand for:
Bill: You know what this category means, Fam. Pretty legit. This is those expenses in which we have to pay those people each month, quarter or year. Configure what are your fixed (insurance, memberships, etc) and variable (electric, mortgage, car note).
Build: These ‘bills’ are what you are paying for future use - savings, stocks, real estate. These are down payments to the life you want to experience later. Yes ‘expense the experience’... even later.
Blow: This is for my spaver and misbehavers. This category allows you to give yourself barriers from going broke. Calculate what you spend on the extra expenses (shoes, bags, Target). Know this number to know how to configure what this ‘allotment’ looks like for you.
I will expand upon the 3Bs soon, but you can already start aligning towards it now. The biggest step you will take is within the start. Checking your check will allow you to know your numbers so things can start adding up in your wealth factor. You can’t build a plan, if you don’t know where you are located.