You are probably like most people and want to control your money, rather than have it control you.
Knowing where your money is going and what you are doing with it provides a certain peace of mind and freedom…
I know you want that too.
Achieving this freedom will allow you to live life on your terms.
Do what you want to do, when you want to do it, with the people you want to.
Imagine the confidence and feeling of empowerment that comes with being able to control your money.
Well, these feelings and the state of control is possible for you. There is a simple way to get started to control your money…
Control Your Money
It all starts by having a money management system.
A money management system doesn’t have to be complicated either. It’s simply creating a system where you know where your money goes, where you control what your money does.
Create a simple money management system that supports your lifestyle. This will enable you to meet all your needs, and treat yourself and those you love without feeling guilty or worried.
A large percentage of your success with money and creating your wealth will originate from the basics of knowing what you do with it.
Sounds too simple, doesn’t it.
But it is a fact…
Too many people will get to the end of the month and have no idea what they did with their money that month.
And this leads to stress and disillusionment…
By not having a system in place, you will spend money on all types of things that you won’t even recall what they were when you get to the end of the month.
The key benefit of a money management system is that it helps you overcome one of the common reasons I hear for not being an investor: ‘I don’t know where to start’.
Having a system in place helps you get started and have a clear focus so you can relax knowing you’re on the right track.
Components of a Money Management System
So what makes up a good money management system?
Below are what I consider the three key ingredients of a simple money management system…
Create a Money Plan
Now I can hear you moaning already, yeah yeah that’s just a fancy way of tricking you into doing a budget…
The simple truth is that you need a plan for your money. Your starting point is to know how much is coming in and how much is going out, and where you are spending your money.
Without a money plan, you can’t make the necessary adjustments required to control your money.
It doesn’t have to be complicated, a simple spreadsheet by month is all it takes. If you want something more automated and designed to support you from the beginning, you can get my 5 Steps to Financial Freedom program that includes my Money Planner resource tool.
Invest in Yourself First
The aim of your money plan should be to identify an amount that you can put toward investing each month… HINT: The Money Planner helps you do this!
However the number one secret of the wealthy, that isn’t really a secret, is that they pay themselves first…
That is, once they identify the amount they can afford to invest each month, they allocate it to investments before they do any other spending.
The great Jim Rohn put it like this:
“The rich invest their money and spend what is left; the poor spend their money and invest what’s left.”
Create Separate Bank Accounts
Now, this is another ninja trick of the wealthy…
They create separate bank accounts for the different types of spending that they have and automatically transfer their income to each account every month.
There are many ways you can set up these accounts, but here is my suggestion for a basic account structure to get you started.
First, you have an income account where your money comes in, everyone will likely already have this one.
Then you have a number of additional accounts that you transfer money into from this income account.
Bank Account Structure
I suggest you have at least the following separate accounts:
- The investment account where you transfer your ‘pay yourself first’ amount.
- A bills account for all the bill payments for that month
- An operating account for your living expenses
- A future fund for planned future expenses
The investment account should include amounts you use to repay and reduce your debt.
The future fund is an account where you set aside money for future expenses, which can include holidays or large purchases that tend to be unexpected, such as when the fridge breaks down and you need to replace it as soon as possible or car repairs.
Once you have the accounts in place, it’s as simple as allocating the money to each account and only using what is in each one for the purpose that you gave the account.
This component of your money management system greatly assists your ability to live within your means.
By allocating amounts to your operating account you are restricted to the funds in that account each month…
…and you should not draw from other accounts if you run out of money in your operating account.
Now a particularly neat trick that I learned when using this system, especially if you are paid monthly from your job, is to transfer money to your operating account weekly.
That way, you are effectively setting it up so that you are paid weekly, and you only ever have to get through seven days before more money is added to your operating account.
So if you get short toward the end of the week, you can make smart buying decisions, which will prevent you from overspending…
Nice one heh!
Once you get started using this money management system, I would highly recommend that you stop using credit cards as well.
The sooner you can live within your means and not have to rely on credit, the sooner you will control your money and be on your way to financial freedom.
By implementing a simple money management system you will quickly establish the freedom of choice in your life.
Control your money and you control your destiny…
Financial freedom is all about having choices to do what you want when you want.
And the exciting thing about having control of your money is that the level required to achieve financial freedom is a lot less than you think.
You don’t need millions of dollars to have financial freedom…
To put this plan into practice and get your money working for you to grow your wealth and secure your financial future, get your copy of the 5 Steps to Financial Freedom course…