The Life-Changing Paycheck Routine

You make adult money but handle it like a teenager with birthday cash.

Here's how to financially grow up. Let me introduce you to Ramit Sethi. A NYT Best Seller, host of Money For Couples podcast, and the host of the Netflix series How To Get Rich.

He made a video over a year ago titled Do THIS When You Get Paid (Paycheck Routine).

This video changed my life when it comes to knowing what to do with my paycheck. The best part is you only have to set it up once and it runs forever.

Below is the breakdown of Ramit’s 3 simple step routine.

First off whats the problem everyone is facing. Well high earners (6-7 figures) still feel broke and don’t know where their money goes. Everyone is playing defense instead of offense when it comes to finances. Why? Because they don’t systems in place, which can lead to financial stress.

STEP 1: Link Your Accounts

Get all of your accounts in order (URL’s, logins, & passwords). Set it up to where once your paycheck hits the bank it’s then transferred to all the necessary accounts.

In your checking account where the paycheck is wired to, you should see link accounts, transfer, or a setup payments option.

This is what your linking structure should look like:

• Paycheck → 401k (automatic deduction)

• Checking Account → Roth IRA, savings account, credit card, bills that can't use credit card

• Credit Card → All possible bills (for points and protection)

• Use bank's free bill pay feature for payments that can't be automatically drawn

This routine has increased my savings 1.5x in the last year. Now at 25 years old I’d say that’s a hell of an increase. The best part is I can let it run and not even think about it.

Now Ramit states 2 key principles:

1. Each account has one specific purpose

2. Fight for simplicity in your setup

STEP 2: Set Up Automatic Payments

There’s a timing strategy to this, if all your bills don’t align within a few days of each other.

Your goal is to get all bills on the same schedule.

You can call the companies or log in online to change billing dates. This scheduling around payday makes the process so much smoother.

Note: Ramit does recommend leaving a $500 buffer in your checking account for safety.

In the video he gives an example if you were paid on the 1st of month. And this is what that schedule would look like:

• 1st: Paycheck deposited into checking account

• 2nd: 401k contribution (usually happens before paycheck)

• 5th: Automatic transfers to savings (5-10% minimum, even $20 works to start)

• 5th: Automatic transfer to Roth IRA (about 10% of take-home pay minus 401k amount)

• 7th: Autopay monthly bills (cable, utilities, car payment, student loans)

• 7th: Automatic credit card payment (FULL statement balance, not minimum)

Not everyone gets paid once a month. I get paid biweekly, and guess what? There’s a simple tweak for that.

Option 1: Replicate the routine on the 1st and 15th with half amounts each time
Option 2: Create a buffer system to simulate monthly pay

How do I input the buffer system?

• Calculate your bare minimum monthly survival costs (rent, utilities, food, loans)

• Save 3 months of basic expenses as buffer (ex: $3,500/month = $10,500 buffer)

• Fund buffer with money that would go to investing + extra from good months

• Use buffer during slow months, replenish during good months

• Always target keeping a 3-month buffer level

The buffer funding strategy:

• Redirect investment money to savings until buffer is complete

• Put all extra income above bare-bones into buffer

• Once the buffer is established, you can simulate stable income regardless of actual monthly variation

Note: The buffer is best for someone that has an irregular income.

So what’s the benefit of setting up the paycheck routine?

1. Your bills get paid on time automatically

2. Focus shifts to guilt-free spending and living rich life

3. You have consistent savings and investing every month

4. No more financial catch-up or stress about where money went

This routine is tried and true from not just myself but plenty of people that watch Ramit. It’s changed the way I spend, save and invest. Go set it up for yourself and watch that money stress fade away.

Comment your money pains and questions below. I check Opener regularly, so I’ll make sure to respond that I’m doing research and writing an article for you.

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