Money. We all talk about it, we all need it for different things, we all use it, but not everyone knows how to handle it. Money on its own doesn’t make a difference. It’s what you do with it that makes a difference. Imagine a person that has millions in an account, but lives an impoverished lifestyle. It just doesn’t add up.
Money shouldn’t be an end in itself, but a means to get to an end: a nice car, nice house, send the kids to good schools, or that designer bag you’ve been dreaming about.
Here are 5 simple things you can do to start taking control of your money starting today:
- Understand your money philosophy: What money means to you unconsciously affects the way you treat it. Our money philosophy is usually based on what we heard or felt growing up and how much we want to stay close to or get as far away as possible from that feeling. To understand your money philosophy, go through your bank statement for the last 3 to 6 months and reflect on what you did with the money that has passed through your account. It’s always an eye opener believe me!
- Don’t spend it all: Sounds simple enough right? Then how come there almost always seems to be more month at the end of the money rather than the other way round? The rule of thumb is to spend no more than 75% of your monthly income. There’s a magical thing that happens when you deliberately set out to do this: you survive on less than you thought you could! Because life throws us things we didn’t plan for from time to time, setting 25% of your income aside gives you a buffer when these ‘shocks’ happen.
- Pay yourself FIRST: Before you pay any bill, as soon as you get the money in your hands or account move out 25% IMMEDIATELY to another account you don’t have easy access to. Banks typically offer a higher interest rate for accounts you don’t take money out of regularly so take advantage of this and let your money start working for you. Don’t wait until after you’ve paid all your bills to start setting money aside, otherwise you’ll never start.
- Get more value for your time: We all get 24hrs in a day, no more, no less. Ask yourself “How can I get more value out of today”. What do you need to do to earn more income within the same 24hrs? Who do you need to talk to, provide a value added service for, or get a raise from? To get more value out, you need to put more value in.
- Have a goal: There’s something about having a goal that drives people to perform at their peak. Set yourself a goal to operate at a higher standard of life. Set your goals in crystal clear terms of how much you earn, how much you have invested, right down to how many holidays you take a year and where you go. Set realistic time frames and be disciplined about achieving the goals. Remember, a goal without a plan and a deadline is just a wish.
When you follow these 5 simple steps for handling your money, your money will be earning money for you, you will have a higher standard for yourself and you will live a purposeful, intentional life!