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The Net-Positive Lifestyle - How To Escape Living Paycheck To Paycheck

End the cycle of stagnancy by adopting a Net-Positive Lifestyle

The Problem

If you’re like most people then every two weeks, you log into your online bank account and smile at the sight of another deposit in your account from your employer. Sadly, this feeling of happiness is quite fleeting because as expenses roll in, your new found cash soon becomes someone else’s’. If this sounds like you then don’t feel bad as almost 8 in 10 Americans are living this meagre financial lifestyle. With this phenomenon of being in a financial but so common I figure it’s time to finally coin this financial issue once and for all. I call it “Net Zero Living”.

You see, the premise of any net zero situation is that as one input comes in, another output exits the system leaving it with absolutely nothing left over. This net zero effect takes place in many circumstances around us. For instance, if you eat 2,000 calories and burn 2,000 through bodily processes and exercise then the net effect on your body weight will be zero and you will not gain or lose weight. This same phenomenon takes place with our money. As I previously mentioned, it’s fine and dandy to get in that nice paycheck every two weeks but the output side of the equation can be equally consequential leading us to parting with every single dollar we made. This financial parity can lead to many sleepless nights worrying about whether an unexpected expense will arise that will push us further into debt or can leave us wondering if our financial luck will ever improve.

Before we get into the strategy I have used to build my own wealth over time, I think it’s worth mentioning my own struggle with the Net Zero Lifestyle and how I was able to overcome this situation and prosper financially.

The Input

In the Net Zero Lifestyle equation, there is the input and the output and as previously described, this income includes things like your salary, business income or side hustle money. The good part about your input is that it feels great to collect and it covers the other side of the Net Zero Lifestyle equation. The bad part about it is that it is often barely enough to do so. In other words, most people struggle financially because they simply aren’t earning enough money to cover their monthly expenses. But why is that? Well, frankly it’s hard to make more money. Employers aren’t exactly throwing money around these days and you may have commitments that stop you from working a few more hours to supplement your income. Alternatively, you may lack the skills you need to earn more money because of a lack of access to education or simply an ignorance to the multitude of different money making methods out there. No matter the reason why your income is what it is, there are luckily some options you can entertain to increase it. My preferred methods of adding to my money making toolkit is to invest in online courses that can teach an in-demand skill. As someone who has completed numerous degrees and professional designations, they pale in comparison when it comes to income generation when held side by side to an in-demand skill. Here I am talking about coding, sales etc. These are skills that can make other companies money and when you can make others money then you are sure to be racking in some cash yourself. But, maybe making more money is not on the table for you right now – if so that’s fine but it makes the second half of the Net Zero Lifestyle equation all the more important.

The Output

Now to the fun part – spending money. Whether you are buying a new appliance because your old one broke down or you just need that new shirt for the party you’re attending this weekend, we all know that spending money is an integral part of life. Some spending feels good like the latter example and some does not (think car repairs and funeral costs). No matter what your money is spent on, it all contributes to your total output of funds every month and the more you spend the closer you get to living the Net Zero Lifestyle. You see, once your spending equates to the amount you bring in then you have hit the breakeven point or what most people would call living paycheck to paycheck. It’s a funny position to be in as a single extra dollar spent would result in you going into debt and a single extra dollar earned would have you starting to prosper financially.

Now, being on the right side of this equation seems simple enough – just don’t spend more than you earn. It’s probably the oldest piece of financial advice and it’s probably the hardest to follow. You see, there are more opportunities to spend now than there ever has been. With the rise in e-commence has come the ability to remove any friction from your spending efforts. It’s not like 30 years ago when you had to go to the mall to buy a new shirt or pair of shoes. With a couple clicks on Amazon you can now get what you want, exactly when you want it without ever leaving your home. With spending being so easy, it’s no wonder only 20% of Americans are financially afloat! But why do we feel compelled to spend this money in the first place? Well if your friend has something then of course you must have it too! This inclination to fit in has been rooted deep within us for many years. Don’t you remember that if your friend got the new Gameboy system that you HAD to have it too? Sure we have gotten older since then but our feelings around fitting in haven’t changed. However now, we have millions of friends to compare ourselves to on social media meaning that we feel like we need a lot more stuff.

This issue muddled with the fact no one knows how much they even charge their credit cards every month makes it glaringly obvious why so many people are living the Net Zero Lifestyle….or worse.

The Solution: The Net Positive Lifestyle

Now that you’re familiar with The Net Zero Lifestyle, its components and the challenges both side of the equation possess, it’s time to beat the system and kiss your past paycheck to paycheck lifestyle goodbye. What we want to do at this point is aim to achieve The Net Positive Lifestyle. As you can probably guess, this means that what you take home every month will eclipse what you spend ultimately leaving you in a net positive cash position.

Now, who will the following advice work best for? It’s simple – those who are currently in debt, those living paycheck to paycheck and those who are already saving and investing a ton of money every month. Does this sound a little off-base? I mean why would the final group need this advice? Well, the fact is that you can always use a reminder of what best practices to follow and even if you are succeeding financially you may still have a lot of room for improvement.

So now let’s dive into the steps that you must take to start living a net positive lifestyle. First off, you are going to need to create a budget and review it regularly. You see, many people perceive the use of a budget as being tedious task but what’s truly tedious is staying up all night worrying if your next paycheck will cover this week’s groceries. I know it’s a little harsh, but a budget can literally remove financial concerns like this which is why you must adhere to it once established. What you want to do is write down your monthly income after tax as the inputs. Again, this includes your salary, business income etc. Next, jot down all of your expenses. This will likely include your rent, groceries, car insurance and the like. But how much do these all cost? If you haven’t budgeted before then chances are you have no idea how much these items and many more are stealing from your wallet every month. Luckily, I have a solution for you so that you can get a clear financial picture of how much you spend in the course of a 30-day period.

Next month, only buy things on your credit card. Then, when the month ends you will have a detailed listing on your credit card statement outlining how much you spend monthly. Add to this amount items you pay via direct deposit like your rent, mortgage or other pre-approved payments and you will come to the total for your outputs.

Once you net your inputs against your outputs, you will have the answer to whether or not you are currently living a net positive lifestyle. If you’re in the negative then what you need to do is cut back on 5 spending categories within the list of your outputs. For instance, you can cut back on entertainment by going out less or on gas by biking to work instead of driving. Cut back in five categories so that you are now spending at least 10% less than your monthly inputs.

But why 10%? From my experience, people often still struggle to track all of their monthly expenses so by building in this buffer you can be sure to avoid overspending.

The second last step is to begin to research a skill you can use to make more money. Sure, you could just pick up another job but the chances of this job ever paying you good money is slim to none. Instead, aim to cultivate a skill you can offer on the open market as a freelancer. Now, this may be one of the last steps, but it may just be the most important one. This is because at some point, you can no longer reduce your expenses to save more money and as a result you must then strive for further positivity by boosting your inputs.

In all honesty, this was the position I was in just a few years ago. I had stripped down my expenses to their bare minimums but at the end of the day you still need to eat, clothe yourself and put a roof over your head therefore I went on the offensive and began to cultivate my copywriting skills. Given that I had always been a decent writer, it only took about a year of practice to start adding an extra $1,000 a month to my income which allowed me to finally start investing.

Now, being the smart reader that you are, you are probably concerned with how your lifestyle will be once you are not only working a 9 to 5 job but are also burning the midnight oil as a freelancer. Well the honest truth is that for a little while, you will have to put in more hours in order to gain financial momentum. I call it financial momentum because once you really get going you will notice that making money will become easier and easier over time. However, you will only gain this momentum by using that extra income wisely. For me, it was buying rental property. You see, I funneled every client payment into a fund to buy a home I would rent out so that I could begin to make more money without sacrificing more time. Now, every month I collect a nice rent check which took negligible effort to earn other than the initial hustle when saving up to buy the place.

I hope that you are now starting to see that living a net positive lifestyle is possible but it takes some effort and knowing the steps you must take to get there. Wouldn’t you prefer to start having your money work for you instead of working for money, money that goes as quickly as it comes in? Well, now you can!

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