Have you ever heard that quote on those bank commercials, “You’re richer than ya think”? Every time I hear that commercial or see an ad for it, often times I’ll hear a comment from someone around me, “ya right…actually I’m poorer than I think”. As funny as that is there is truth to either statement if you believe it. Also, lots of people think or say that once they have a lot of money they’ll learn to manage it…well I say, Learn to manage your money and you’ll have lots of it!! I believe that even on a minimum wage income, armed with a proper money management system, ANYONE can become financially free and one day…truly be rich!
Before we get to the real learning, we all have to clarify one important thing with ourselves. I want you to be successful! If you truly want to be successful, you have to be honest with yourself! Sometimes it seems easier and more natural to lie to yourself than to anyone else…I promise you that if you’re dishonest with yourself, you will never be successful in ANY way and that includes money, health, relationships, spiritually, business and any aspect of your life. So please do yourself a huge favor and be honest with yourself always because ultimately you’re responsible for your life and if you want to live a fulfilling life…honesty is an amazing policy! OKAY, here we go!
In order to have success with this system there are 2 processes you will need to do that may be out of your comfort zone, but if you recall from my last post…that’s a great place to be! You’ll need to sign up for online banking (if you’re not already set up) and open up 7 new accounts (make sure these new accounts don’t have any fees attached with them otherwise it kind of defeats the purpose), you’ll need 8 accounts if you own your own business. Now wait, do not worry! This is A LOT easier than you may think and believe me, it’s well worth the time to learn how to do it if you don’t know. Any questions on how to do this just call or visit your bank online or in person.
Now as well as opening the online bank accounts, you’ll need to find 7 jars (8 if you own your own business), the bigger the better…the bigger the jar the more money right : )
Okay, we’re just about there! You’re going to need to label all 7 online accounts and all 7 jars respectively. The following are the names of the accounts, the amount of money that goes in them and a short description explaining each one. Also I do understand there are a lot of people below the poverty line who don’t make much money…it’s okay, if you have ANY money, you still have money to manage!
If you own a business and do your own finances and taxes the first thing you should do with every type of payment or income is to take 20% from it and put it in your Tax account, then pretend that what you have left is now the 100% from which you’ll distribute into the other accounts below.
Essentials (ESS) – 55% - this is the portion of earnings you use to pay for life; bills, food, gas, budget money, etc.
This account is for essentials only. Things you need on a day to day basis to live like your mortgage or rent payment, or insurance on the car and food. In many cases, 55% of your income is not enough to cover your regular expenses. In that case either simplify your life by reducing unnecessary expenses like cable TV, magazine subscriptions, etc. You can find less expensive living arrangements(find a roommate) if need be or increase the percentage of the Essentials account to ensure you don’t have to use credit to get by. So if you have to, use 95% of your earnings into Essentials and split the remaining 5% into the other accounts. The point of this system is to instill good money habits, so starting anywhere is still starting! Good on you for taking the first step!
Financially Free account (FFA) – 10% First and foremost and most important…this is PAYING YOURSELF FIRST.
This is an account that you will put money into EVERYDAY…whether it’s a penny you found on the ground that day, or 10% of your pay cheque or through a savings program like “bank the rest”(every time you use your debit card it rounds up the purchase by $1, $5 or $10 and puts it into an account of your choice), the change that’s in your pocket at the end of the day or any random amount for no reason other than you just feel like adding money into the account that will allow you to never work again! The only way money ever comes out of this account is if it’s going into a growth equity investment. You want this puppy to grow and grow, not just sit there. Make it a point every 1-3 months to take the entire amount from this account and invest it (we’ll talk about how you can invest this in a future post). This account is your best friend…make sure you rejoice every time you put money in it, even if you feel silly at first!
Fun account (FUN) – 10% This is going to be your favorite account by far!
Make sure that 10% of all your income goes into the fun account. This is the account that will allow you to pamper and nurture yourself by doing the things you would do every day if you were rich. Depending on how big of a “fun” thing you want to do, you can let it save up for a month or even 3 months, but make sure that you find a time regularly to absolutely blow it…spend every penny in this account on yourself. Go for the fanciest supper you’ve ever had, rent out a yacht for a few hours, buy clothing or toys that you really really enjoy and have fun with. Just remember too, when you’re enjoying this account make sure to feel the feelings of gratitude, put the energy out there that this is what you love, this is what you want more of and it can be very powerful in attracting more of these situations into your life!
Learning account (LEARN) – 10% – Always grow yourself by learning more everyday.
With this account you should build your knowledge and improve your skills and abilities. Take a course on investing your money, buy a book on healthy living or join a personal evolution mentor program. Also depending on what you do to earn income, take a course or training from industry leaders in your field and learn to do what you do even better! This is the quickest way to improve your standard of living and add value to yourself as a person. This is a very exciting account!
Long Term Savings to Buy account(LTSB) – 5% Save up for larger purchases down the road.
This is a longer term savings account but will be used for spending or items such as a computer, new car, a piano, a big vacation trip, an atv, camper, boat or a TV (if you own one). This ensures that you don’t ever have to use credit to buy larger purchases. When the day comes that you are completely debt free, or you’re currently debt free you can increase this amount to 10%.
Long Term Savings for Debt repayment account (LTSD) - 5% Become debt free faster!
Chances are, if you’re not a monk or rich you have debt. In order to speed up the process of paying down your debt, at the end of every month, transfer the contents of this account against your highest interest loans, usually credit cards. I would suggest simply making minimum payments on all of your loans or credit cards with your Essentials account then use LTSD monthly to put lump sums against debt. If at all possible, try to increase the 5% up to 10% by decreasing your Essentials to 50%. Basically, the sooner you become debt free, the sooner you keep all of your money you earn and start to grow it big, FAST!
Give Back account (GIVE) – 5% Share with others!
This is the account to use for things like birthday gifts or charitable donations or even taking a friend out for a coffee. This way you can give back to the people around you while knowing that you’re not putting yourself in financial trouble to do so. I believe it is always a good idea to pass along the wealth you’ve been able to create in your life to inspire others to do the same!
SO!, Now that you are armed with the simplest and most effective money management system ever, I am very excited! I ask that you put it in to motion immediately, and I promise that you will notice a difference in how much money you actually see that you have, in no more than a month! Always believe in yourself…you ARE richer than you thought you were!
Thank you so much for your attention. I based this system off of teachings by T. Harv Eker. If you have any questions about the money management system or anything else, leave me a comment or email me and I’ll write you back!
Here’s to growing!