Ramsey Personality George Kamel: This Is Why You’re Broke (and How To Fix It)

If you feel like you’re broke these days, you’re not alone. Financial guru George Kamel explained that 78% of Americans feel like they live paycheck to paycheck. What’s more? It’s reported that half of people earning over $100,000 annually are living paycheck to paycheck too.

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The reality is that these Americans will stay broke unless they make some changes. Luckily, there are several things you can do now that can make a positive financial difference.

Here are five ways to improve your finances and stop being broke , according to George Kamel:

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1. Know Exactly What You Spend Your Paycheck on Every Month

Not knowing where your money is being spent every month is not good. Consider getting on a zero-based budget, meaning that your income minus expenses equals zero. This way, every dollar will be at work, and you’ll be able to identify your exact spending habits and evaluate whether you’re spending too much.

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2. Take Care of Your “Four Walls” First

Your “four walls” are food, utilities, housing, and transportation. It’s crucial to dedicate your take-home pay to these four expenses before anything else. If you put dining out and vacations first, this could mean that you have to lean on credit cards to make up the difference, which is financially dangerous.

3. Cut Unnecessary Expenses

There are probably a number of expenses that you can cut back on or cut out completely. Review your bank statements to identify the expenses that may not be totally necessary. Canceling unused streaming subscriptions, avoiding coffee runs, and not going out to dinner twice a week can put hundreds of dollars a month back in your pocket.

4. Reduce and Eliminate Debt

Debt eats away at your finances and creates a financial drain. Be sure to prioritize debt reduction and elimination above all else. Start with paying off the highest-interest debt first and then tackle other debts.

5. Start an Emergency Fund

If you have an insufficient emergency fund (or you don’t have one at all), you could be one lay off or broken HVAC system away from a financial disaster. Start by saving $1,000 as soon as possible and work toward saving at least 3 to 6 months of expenses in cash. Parking your cash in a high-yield savings account allows your money to grow and compound along the way.

This article originally appeared on GOBankingRates.com : Ramsey Personality George Kamel: This Is Why You’re Broke (and How To Fix It)