WARNING: Participating in the below activity can lead to increased blood pressure, frustration, and possibly anger.
Have you ever given much attention to the deductions from your paycheck?
Here’s what I know. If you don’t personally pay the bill and an expense is paid out of your paycheck before you ever receive it, chances are REALLY HIGH that you will be shocked to discover how much you are really paying!
I challenge you to pull up your paystub from the last paycheck you received in December 2010 and look at how much has been taken out BEFORE you ever received the check.
How much did you pay last year for:
- Federal Income Tax
- Social Security Tax
- Medicare Tax
- State Tax
- Local Tax
- Insurance Premiums
Now take those amounts and divide them by how much you were paid last year. What percent of your pay was taken out to pay for taxes and insurance? After you have taken your heart medicine, would you mind sharing your percentage in the comments?
My first paying job was working for my father when I was about 10 years old. He was a homebuilder and part-time hobby farmer, and I worked a variety of jobs.
One of my favorite jobs was assisting with the framing of a new home. It was incredible to see the skeleton of a home go up so quickly, and the fresh-cut pine lumber smelled incredible. You could see so much progress. Near the top of the list of my least favorite jobs was chopping weeds out of the soybean fields in the heat of summer. Regardless of the task, it was worth it because I was paid money. I was paid upon completion of a specific task or at the end of each week. My twin brother and I managed to save enough money to purchase a Pentax K-1000 35 mm camera (which indicates that I am getting old) and a Honda C70 Passport motorcycle.
When I began work in my first engineering position, my employer paid me every two weeks. Since I was busy spending all the money, it meant that I usually experienced a feast-famine cycle each month. The first paycheck of each month immediately disappeared to pay all of my debt obligations, while the second paycheck presented the opportunity for some fun spending.
In December 2002, I accepted a position with a new employer. This new employer paid on an entirely different pay schedule – monthly. Not weekly, not biweekly or bimonthly. Monthly. My immediate reaction was negative. Was I ever wrong. Monthly paychecks provided us the opportunity to pay our monthly bills all at one time. It also made it much easier to plan our spending with a monthly budget.
WARNING: I am an engineer, and this means that I do ascend into nerd-like behavior at times. This is one of those times. I believe that my money management was absolutely affected by the frequency of my paychecks, and it has caused me to wonder if the same is true for most people.
For instance, what if you were able to be paid yearly? On Jan. 1, you would receive all your pay for the year. Would it cause you to manage your money any differently than you do today?
I believe that it would. I believe that more people would take the opportunity to immediately fund their savings for retirement, college, and other known upcoming expenses – like Christmas, vacations, car replacement and property taxes. It would also require individuals to become excellent planners. Knowing that this money would be needed to fund all expenses for the rest of the year would make a budget absolutely imperative.
Of course, I believe a budget is imperative regardless of pay frequency.
What about you? Would you be more likely to save more if you were paid differently?
I am a HUGE fan of savings accounts. I am an even HUGER (I made up that word) fan of savings accounts with money in them!
Here are some proven strategies for piling up HUGE CHUNKS of money in your savings account:
- Save the “magic month” paycheck If you are paid weekly, you normally receive four paychecks a month, but there are four months each year where you receive FIVE paychecks. Budget and live your life on four paychecks per month and you will be able to save the extra paycheck every three months! Paid bi-weekly? Budget and live your life on two paychecks per month, and you will be able to save the extra paycheck during those two magic months each year that you get three paychecks.
- Save the TAX REFUND As a spender, I know that the word “fun” is right in the middle of the word refund. However, maybe the right thing for you to do this year is SAVE your tax refund.
- Automatically send 10% of paycheck to savings If the money makes it home in the paycheck, it is at risk of special magic disappearing acts – even for the most conservative of people. Set it and forget it. You won’t regret it.
- Save the BONUS Don’t spend it – just this once. Put it into savings. It is amazing how great it feels to be able to say, “NO!”, to yourself and put your BONUS into the savings account. It gives you the feeling that you truly are in control of your money!
- Sell something The old RC airplane in the garage just needs to go. So do the bikes that you don’t ride. So does the boat you use once per year – it’s cheaper to rent one when you need it. Put the money into savings. You will end up with an cleaner and neater garage and attic and a plump savings account!
How have YOU saved money BIG-TIME?
One of the biggest reasons the crusade is able to help people accomplish far more than they ever thought possible is because we have trained Financial Coaches all over the country. When we partner with a church or organization for a live event, we teach valuable principles and tools that equip people and provide them with hope and inspiration. But at the end of the day, we have to travel back home.
It is the Financial Coaches we train that provide the ongoing 1-on-1 help and assistance people need for their individual financial situations. Helping people put together a plan and showing them HOW they can win with their money is the most important thing, and Financial Coaches make it possible.
You might be interested in becoming a financial coach as well, but haven’t had the opportunity to go through our live training. The reason is usually we either haven’t been to your area or your church hasn’t launched a financial ministry yet. It might be that your church has been waiting for someone like you to step up and start the financial ministry!
Do you want to be a vital part of this crusade to help others win with their money? Are you winning with the management of your own personal finances, and are passionate about helping others accomplish the same? We are PUMPED to introduce you to possibly the most life-giving and joy-filled opportunity you may ever find:
Become trained to be a financial coach!
For only the second time EVER, we are making it possible for the right people to become a part of the crusade no matter where they live! The Financial Coaching Experience will be taught LIVE ONLINE on SATURDAY, January 15th, from 9AM to 3PM Eastern Time! If you are interested in this opportunity, fill out the application form below to be signed up for an on-line (of course!) informational meeting where we will share the details of the training and answer any questions you may have.
This is a LIMITED OPPORTUNITY because we can only train ten people at a time. Fill out the form below NOW to reserve your spot in the informational meeting being held on-line next Tuesday, January 11, at 11:00AM Eastern Time.
On-Line Financial Coaching Experience
DATE: Saturday, January 15, 2011
TIME: 9AM – 3PM
COST: $295 – includes all materials
- Passionate about helping others win with money
- Winning with your own money
- Committed to providing financial coaching to those in your community
- Step by step process for launching your own financial coaching
- Hands-on application of the tools with real-world scenarios
- Access to the I Was Broke. Now I’m Not. Team
- Access to the tools and documents that can be revised to suit your organization’s needs
- All necessary materials
- The opportunity to network with others who are becoming financial coaches
- A Certificate of Completion
Can’t see the form? Click HERE to access it directly on the web.
Already KNOW that you want to participate? You can register NOW by clicking below (or by clicking HERE):