HOW TO MANAGE YOUR MONEY
Achieve Financial Freedom by Saving The Right Way!
I actually wrote this article a while back when I was still in the job world. I had done an interview for a job at a financial institution and they had asked me to submit an article on the topic of money management after the interview was done.
I never got the job as they thought it would be a conflict as i’ve always believed that my job should still allow me the freedom to pursue my dreams. They didn’t agree. Anyway; I’m happy to say I’m no longer in the 9-5 job market but I thought the info below could be useful to many people especially based on the current times we are living in.
GaryVee mentioned on his social media today, that he predicts that one of the things that will come out of this current Corona Virus situation is that people will learn to save better. When he mentioned it; I remembered this article I had written back in 2015 and decided now was a good time to share it.
Your Comfort Zone is Equal To Your Weath Zone.
What does this mean for you? If you are comfortable with what you already have then there is no need for further development or to strive for higher. Most people however are uncomfortable and want more. In order to have more, one must do more, make more .
Don’t Try To Re-Invent The Wheel
Experience has taught us that it is not about the amount of money one earns but rather the amount that you are able to save that will determine your wealth.
If I made what would be considered a significant amount of money on a monthly basis, but spent it just as fast as I made it, then I am in no better a position than the man who makes one third of what I make if he was to save just about ten to fifteen percent of his earnings every month. In the long run, he could end up being a lot better off than me.
So what is the first step to financial freedom through savings? Go to your bank today and create an account. Let’s call it the “Financial Freedom Account” then from now on you will place 10% of any money earned here. Do not touch this account, it is never for spending. It is solely for the purpose of investments. By investments I mean specifically buying and creating passive income streams. This is not house and car money. Oh and don’t worry, once you get into the groove of this, you will not miss the 10%. You must allow your money to work hard for you.
Ok, so now that you have gotten use to that 10% and you realize it really wasn’t as hard as you expected, go ahead and open another account. This should be equal and opposite to the first account. This means if your Financial Freedom account is increased to let’s say 20% then so should this one. Whats the point of a play account? It’s simple “to blow” money. If you are going to be financially free you must have a financially free state of mind. You must spend this 10% every month in a way that makes you feel rich!
Now we have the Financial Freedom account and the Financially Free mind set. We need money to build on our current lives, so we need to establish a long-term savings account that is for spending. This is your house and car money. Take 10% of all money earned and place it here. It can be used for down payments and monthly payments on long-term purchases.
I Am Committed To Constantly Learning And Growing
Education is a must regardless of the path you have decided to take in your life. Education can allow you to earn more money and so you should always have an account for this. That’s another 10% right here. This is probably the most valuable 10% you could save.
I Create The Exact Level Of My Financial Success
At this point you may be getting nervous and wondering how are you supposed to live if you are saving so much of your money, but trust that once you start you will realize that you probably don’t need to spend as much as you have grown accustomed to. Your next account will be for living necessities and will be the largest percentage of your earnings. It will also have the highest turn over rate. This account gets 50% off all you earn. This is for rent, food, hydro, etc
Give And You Shall Receive
Now that we are financially free, we can focus on philanthropy. Create a give account that gets 10% and then get to giving. If nothing else, it will make you feel good.
Now the last step to becoming financially free is this. Now that we have allocated every last cent that you have earned, figure out how you will earn an additional $10 per day. When you earn it, put it in a jar and call it your “Financial Freedom Jar”. At the end of the month if you haven’t used any of it, you would have an extra $300 to do whatever you want. Now you are FREE!
References: Secrets of the Millionaire Mind © T. Harv Eker 2005
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