Money / Financial Planning
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You have an amazing job with great benefits. So does your significant other, and together, you make well over six figures a year. So why are you living paycheck to paycheck with little to nothing in the bank at the end of the month?
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Matthew Grishman, a principal and wealth advisor at Gebhardt Group Inc., knows why. He once lived like that.
Grishman tells the story of how he earned $22,000 in 1995 as a stockbroker in his first job. He squeaked by paying the bills, and he wished he had money left over for a weekend splurge or to buy things the way his friends did. He dreamed of a raise.
A year later, he got that next job and a $3,000-a-year salary increase. Then he got the next raise. And the next raise. And he bought all those things he wanted.
“With each pay raise came rewards: a nicer car, a bigger house, fancier suits, more expensive meals; all the necessities for keeping up with everyone around me,” he said. “By the time I was 33 years old, my pay had increased over 2,000 percent from my initial $22,000 salary and my lifestyle had certainly reflected the massive pay increase over time. I wasn’t just keeping up with the Joneses; it felt more like I was Mr. Jones himself.”
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He still spent like that 22-year-old. He had enough money to pay the bills each month, and not much more to show for his hard work than things.
“I had no financial security other than the hope of not losing my job. I was one bad day at work away from complete financial ruin, despite earning a healthy high six-figure income.
“Lifestyle inflation,” he said, “is the single greatest risk to one’s financial security.”
Lifestyle inflation. That’s why, financial experts say, it’s impossible to escape the cycle of living paycheck to paycheck unless you retake control of your finances. So, how do you get started?
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Review Your Income and Expenses
Take time to get organized, jotting down your income and looking at what goes out every month. It isn’t that hard since most everything is automated these days.
“Most of us have direct deposit. Log into the account that receives your deposit and run a filter …….