Financial guru Ramit Sethi recently shared the seven levels of wealth. Each level has different circumstances and strategies you can use to advance to the next level.
Survival mode is the lowest level on the list, and Sethi shared some of the characteristics of people in this position.
“One unexpected expense can throw your whole life into chaos,” he stated when describing people who are financially surviving.
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He didn’t stop there. Sethi also described this level as feeling like money is controlling you. However, he offered a path out of this level in the video. If you want to get out of survival mode, these strategies can help.
Start Tracking Your Finances
Sethi said that the people in this group do not know how much they make and how much they owe. Not knowing this information turns your finances into a guessing game. You won’t be sure if you are using your money optimally, and how much you have left over at the end of each month.
Looking at past credit card statements can help you get a better understanding of how much you spend and where your money goes. You’ll have to look at past pay stubs and direct deposits to assess how much you make. If it’s hard to gather that information over an entire year, Sethi offers a simple formula for calculating how much you earn.
He told viewers to double their hourly wage and add three zeros. While it won’t be accurate for everyone. It may be a good gauge for some people who don’t have an easy way to see how much they earn each year.
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Start Small
Investing is an important part of becoming debt-free and building long-term wealth. While the thought of regular investments may seem overwhelming, Sethi recommends getting started with small steps.
Saving $20 per month won’t be enough to retire in 30 years, but it gets you into the habit of saving. You can build on the momentum and eventually save $50 per month. As you chip away at your debt, you will eventually see a path out and put yourself in a position to make investments.
As you pay off your debt, make sure you jot down every little detail. Sethi tells people to write down every bill, debt, and expense. Keeping this information available can help you think more consciously when you spend money.
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Increase Your Income
Cutting expenses will help you get more control over your finances, but there are only so many costs that you can remove from your budget. Eventually, you have to increase your income through side hustles, starting a business, or exploring new career opportunities.
Building your income allows you to make larger payments toward your debt. You can achieve your long-term financial goals faster if you work extra or tap into opportunities that let you earn more money while working fewer hours.
If you are in survival mode, you can’t stay there. Applying these strategies consistently can help you advance to higher levels on your wealth journey.
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This article Ramit Sethi Reveals How You Can Tell If You Are In Survival Mode: ‘One Unexpected Expense Can Throw Your Whole Life Into Chaos’ originally appeared on Benzinga.com
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