8 Simple Steps to Manage Money
In order to master money, you must manage money. The habit of managing your money is more important than the amount. Some people think it’s all about income; they believe you have to earn big to get rich.
Let me show you a money management program that I learned from T. Harv Eker, the author of Secrets of the Millionaire Mind. If you manage your money following this program, you can BECOME FINANCIALLY FREE on a relatively small income.
If you mismanage your money, you CAN’T become financially free, even on a huge income. That is why so many high-income professionals are basically broke, because it’s not just about what comes in, it’s about what you do with what comes in.
Managing your money allows you to eventually create FINANCIAL FREEDOM so that you never have to work again. Show the universe that you can handle what you’ve got, so you will get more! Here are the
8 Simple Steps to Manage Your Money:
Step 1: Open six (6) bank accounts, or if your savings isn’t big enough to open bank accounts, get six (6) jars. Get transparent ones so you can see your money growing in these jars. These will be called your Money Jars.
Step 2: Label them as
- Necessities Jar/Account (NEC)
- Financial Freedom Jar/Account (FFA)
- Long-Term Savings for Spending Jar/Account (LTSS)
- Educational Jar/Account (EDUC)
- Give Jar/Account (GIVE)
- Play Jar/Account (PLAY)
Step 3: Put 10 percent (10%) of every peso you receive (after taxes) into your Financial Freedom Bank Account or Jar (FFA). This money is only to be used for investments and buying or creating passive-income streams for your retirement.
The job of this account is to build a golden goose that lays golden eggs called passive income. When do you get to spend this money? Never! It is never spent – only invested.
Step 4: Put 50 percent (50%) into your Necessities Jar or Account (NEC) – This jar is obviously for your necessities like food, water, transportation, Meralco bills, etc.
Step 5: Put 10 percent (10%) into your Long-Term Savings for Spending Jar or Account (LTSS) – This jar is for an item or anything that you are saving up for. For example, a new cellphone, TV, computer, etc. If you don’t have any big ticket item to save up for, I suggest to increase your FFA jar to 20% by adding LTSS to FFA. This will build up your FFA faster!
Step 6: Put 10 percent (10%) into your Education Jar or Account (EDUC) – This jar is not for your child’s educational needs but for your own educational and self-development needs. Studying, training, and developing yourself doesn’t stop after high school or even college.
You need to invest in yourself, especially in your financial education, which wasn’t taught in school. Immerse yourself in books, CDs, seminars, training about money, finances, success, business, marketing, etc. You stop growing and start dying if you stop learning!
Step 7: Put 10 percent (10%) into your Give Jar or Account (GIVE) – This is to give 10% of your income to your church where you draw spiritual growth from or to your favorite charity or foundation.
Step 8: Put 10 percent (10%) into your Play Jar or Account (PLAY) – One of the biggest secrets to managing money is balance. Yes, you want to save as much money as possible so you can invest and make more money, but on the other side, you would also want to satisfy the “fun-seeking” side of you.
The Play Jar or Account is meant to be spent on things that nurture you and allow you to “feel like a million!”
The rule is that it must be spent every month. That’s right! Blow that play account each month in a way that makes you feel rich!
For example, get a massage or spa treatment, or dine at a first-class restaurant and order their best wine, or check in at a five-star hotel. If you want to go on a more expensive vacation, you could combine a few months’ worth of “play” money. Just spend this money on whatever makes you feel rich!
The play account is designed to offset our saving efforts. This will make managing our money a lot more fun!
Every time you receive money, may it be in the form of gift, paycheck, or bonus, divide it as above. Let these simple jars become your “money magnet,” attracting more and more money and opportunities for financial freedom into your life!
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