5 Reasons Why You Can Not Get Ahead Financially

Unfortunately in America, it’s not uncommon for families or people to live paycheck to paycheck. However, today we will cover why people are living paycheck to paycheck and what can be done to get ahead financially. You can not get ahead financially because you’re only depending on a job for income when you should have multiple income streams. Although, not having multiple income streams can be a big reason why you are not getting enough income, there can still be more reasons why your income is not enough. Let’s learn more about those issues now.

1. You Need More Streams of Income

Firstly, if you have not learned this before, the best way to make money or get wealthy is to have multiple streams of income. Although having a job is usually everyone primary and only source of income, it is the worst source of income because you have to trade time for money. To get ahead, you need money coming in that requires little time which can be called residual or passive income streams. Right now, you are likely relying on an active income.

Active Income with Example

Active income is when money is created as a result of accomplishing a task. The most common example is working a job. You work a certain number of hours, you get paid a certain amount of money. When you stop working, the money stops coming in. To get ahead financially, you need to cut out your active income and increase your passive income to make money regardless of time input.

Passive Income

Passive income is money made with little to no added work. A simple example of this is, if you have passive income, you would go to sleep, then wake up with more money than you had yesterday. This could be income that you receive daily, weekly monthly or yearly without having to add much extra effort or time to keep the money coming in.

Passive Income Example

Here’s an easy example of passive income. Let’s say you made a YouTube channel and grew your audience large enough to monetize your videos. As a result, YouTube will allow you to get paid for every ad that is viewed before your videos start. If you were able to create your audience from 50 videos using evergreen content, you would not have to create a new video again for years and your ads would be showing after every view. Clearly then, you could be asleep and your videos would be passively generating income for you.

2. You Don’t Spend Time on Assets

Now that you’ve learned about passive income, we can now go a little further. When you have something generating you money, we will call those “Assets”. Based on the previous example, your YouTube channel would be your first asset. The assets are your streams of income and the more you have, the more money you make. But how did you get that YouTube channel? You invested TIME to create it.

Building Your Natural Assets

Before you run off and even think about building your new YouTube channel, we need to help you build the first thing you need to invest time in! The first most important asset you can build with time is your BRAIN. Today, you’ve built it a little bit but you must realize, knowledge will be your most valuable asset. Not only that, you will continue to grow this asset as long as you are on the path of getting ahead financially. So continue to learn from the internet and books relating to your goals to keep developing your brain. Now that you understand your brain is the first asset, let’s get some time investment ideas for your second asset.

Time Invested Asset Blog Example

After having a clear understanding of these two examples of time invested assets, you can set a goal to start with one of these or go out and find more ideas. A blog is an example of an asset you can create by investing time because you can write them, then the posts can generate income for you for years. This is very similar to the YouTube example. Except, instead of getting paid for ads in your videos, can you get paid for ads near your blog content.

Who Should Blog

Blogging may be a good fit for you if you’re interested in building your own website, feel very passionate about a specific topic and feel you can write a minimum of 1,000 words per topic to create value for someone else. The page you are reading now is a perfect example of a blog.

3. You Don’t Spend Money on Assets

Next, if you’re wondering why you can not get ahead financially is because you are not buying assets. Just like you can spend time to create assets, you can also use the money to buy assets. Let’s look a bit closer at an asset example you can buy. Then, maybe you can find more options that suit you.

Real Estate

Real estate is probably one of the most obvious and popular assets you can buy. Although this may not sound like an easy asset to acquire, you can take a moment to realize why it’s a great asset and aim to acquire one for yourself if it suits you.

Multi Family Homes as Assets

Let’s use my favorite home type as a cash invested asset example. Not only will this be a great example of an asset, it’s something practical you can aim to achieve now. Let’s look at a property commonly known as a fourplex. A fourplex is a property with four units. Just think of it as a small apartment complex. It only has 4 tenants! The great thing here is, you can own it yourself. Generally speaking, a fourplex can cost around the same price as a typical single family home. As a result, you can aim to own this asset instead of the big house which would be a liability.

Why Fourplexes are Assets

Although you can turn any type of home into an asset, we like multifamily more. This is because, if you had to replace a roof, would you want to replace four roofs on four properties or one roof on one property? Moving forward, a fourplex is a great asset because you can live in one unit and rent out the other three. Depending on your market, the rents someone will pay you to live in your property could potentially cover your entire mortgage payment! This means, essentially, you could be living for free just by deciding to live in a multifamily home instead of a traditional house.

Asset Examples Now

As previously mentioned, learning from books and this website are a good place to start gaining more knowledge about getting ahead financially. When you’re ready to start taking action, we’ve compiled a list of ways to create online assets here. 

4. You Are Not Managing Your Monthly Income

If you are someone who feels you are making a decent income and you’re still wondering why you can not get ahead financially, this may be your problem. You are not managing your monthly income by reviewing how much money comes in monthly and how much goes out monthly. Click here to see what that looks like. As a result, you can be losing money by still paying for things that you don’t need or spending more money on something than you prefer; such as eating out.

Expensive Hobbies

If you start reviewing your monthly expenses, you may notice you are spending too much on hobbies like bowling or drinking. Although these things may seem affordable at first, when you spend money on hobbies weekly or even daily, they add up fast. Check how much you are spending on weekly or daily activities and ensure they are not costing you more than you think.

Forgotten subscriptions

Today we have a number of businesses who allow subscription services. This is because, it makes sense to have a monthly fee for some service. On the other hand, some companies  know you might forget and keep paying. Go through your banking statements and ensure you are not still getting charged for a subscription service you may not be using anymore. Depending on what your in to, this can be costing you hundreds if not thousands per month. Not getting these subscriptions under control is just like giving your money away. 

5. You Have too Many Liabilities

Lastly, you can’t get ahead financially likely because you have too many liabilities. Liabilities are the opposite of assets. Every month, a liability costs you money and can be for a limited time or last forever. A good example of a liability is renting an apartment. Although everyone needs a place to live, the apartment does not provide money for you and only takes money from you for an infinite time. Let’s look at some more liabilities to see if you can clear them up or limit acquiring them.

The Vehicle Liability

Unless you pay for your car in full, you are paying monthly to keep the vehicle. Although we can go further into this by taking into account the gas it takes to travel long distances to work, maintenance and insurance, by only focusing on the monthly payment plan, that should suffice for this example. You can have a vehicle to have transportation but, did you get the wrong one? Your monthly payment for your vehicle can be too high to where, even if you are getting passive income or you have a good job, the car payment is taking too much of your income to stay ahead monthly.

Transportation Liability Solution

If you find out your car is taking nearly half of your paycheck every month, you may want to reconsider the vehicle you have by getting a cheaper on or consider not having a vehicle at all and using a new form or transportation. On the bright side, this is one of the few common liabilities that eventually ends. Once you finally make all your payments, the liability ends; not considering vehicle upkeep.

The Renting Liability

This one may be a big issue for many people. The easiest example to understand here is the apartment. You can be working a job for ten years and still be wondering why you are not getting ahead financially. As previously mentioned, if you are renting something, the payment never goes away.

The Renting Solution

Try to convert anything that you are rent into an actually payment plan that can be paid off like a car or buy the product or service in full. An example of this would be instead of renting an apartment, go find a property you can own like a fourplex to set a cap on your payment obligations. Instead of renting a cable modem from your internet service provider, go buy your own instead of paying them extra money indefinitely.

Conclusion

In final analysis: If you are not gaining multiple streams of income, reducing your active income dependence, not investing time into assets, not putting money into assets, not managing your monthly income and acquiring too many liabilities, it will make it extremely difficult to get ahead financially. If you use sound judgment and start the concepts and solutions provided above, you will get ahead financially. To get more tips like these, subscribe to our email list here.