Managing money starts with knowing where your money is going and having the control as to how it will be spent, invested and grown. First, you have to divide the money that you receive every paycheck or whenever you receive any money, into specific purposes or expenses.
Billionaires are not any smarter, they only have better money management habits.
Generally, your money must be divided into six different parts:
Financial Freedom Account (FFA) - 10%
This is the money that you set aside for business and investments. This is not a savings account, rather it is called an investment account. You do not spend this money in any way possible unless it will be for a certain business venture or an investment opportunity.
Savings for Expenses (SFE) - 10%
This part is for spending. If you want a new phone, a new gadget or a new car, then this account will supply the money for that. Keeping a savings account for this purpose eliminates your chances of going into debt and in overspending.
Financial Education Account (FEA) - 10%
Learning more about financial education helps you more in becoming financially healthy and free. Invest on books, seminars and trainings. If you think education is expensive, try ignorance.
Rest and Recreation (RAR) - 10%
Depriving yourself will not help you achieve financial success. Overindulging will not help you either. The key is balance. This account if like a reward. Spend it for yourself every month or every quarter. It is mainly up to you as long as you get to enjoy the fruits of your labor.
Everyday Expenses (EE) - 50 - 55%
This account includes your daily allowance, transportation and food expenses, utilities and other necessities. Ideally, 50% is enough, but if it is quite hard to start with, 55% is still good.
Gift and Contribution (GAC) - 5 - 10%
Charity is a fulfilling way to say thank you to every blessings that comes your way. This money can go to your church, a foundation that you support or even to a friend who unexpectedly needs financial help. The key is to always have an amount ready to be given to others. The more you give, the more you will receive.
This may be as simple as they look, but they are really powerful. Some people find it hard to start as they believe they would always run short, but it is actually the opposite. Keeping this habit will help you have more control with your money as in comes and goes.
If you feel that you cannot follow all the other divisions since your expenses are quite big, you may follow this:
FFA - 10%, SFE - 1%, FEA - 1%, RAR - 1%, EE - 86% and GAC - 1%
This way, you will still be able to follow the management more comfortably. Remember, it is not the amount but the habit that is important. A few hundreds today may soon be billions with the help of these six different money accounts.
Billionaires are not any smarter, they only have better money management habits.
Generally, your money must be divided into six different parts:
Financial Freedom Account (FFA) - 10%
This is the money that you set aside for business and investments. This is not a savings account, rather it is called an investment account. You do not spend this money in any way possible unless it will be for a certain business venture or an investment opportunity.
Savings for Expenses (SFE) - 10%
This part is for spending. If you want a new phone, a new gadget or a new car, then this account will supply the money for that. Keeping a savings account for this purpose eliminates your chances of going into debt and in overspending.
Financial Education Account (FEA) - 10%
Learning more about financial education helps you more in becoming financially healthy and free. Invest on books, seminars and trainings. If you think education is expensive, try ignorance.
Rest and Recreation (RAR) - 10%
Depriving yourself will not help you achieve financial success. Overindulging will not help you either. The key is balance. This account if like a reward. Spend it for yourself every month or every quarter. It is mainly up to you as long as you get to enjoy the fruits of your labor.
Everyday Expenses (EE) - 50 - 55%
This account includes your daily allowance, transportation and food expenses, utilities and other necessities. Ideally, 50% is enough, but if it is quite hard to start with, 55% is still good.
Gift and Contribution (GAC) - 5 - 10%
Charity is a fulfilling way to say thank you to every blessings that comes your way. This money can go to your church, a foundation that you support or even to a friend who unexpectedly needs financial help. The key is to always have an amount ready to be given to others. The more you give, the more you will receive.
This may be as simple as they look, but they are really powerful. Some people find it hard to start as they believe they would always run short, but it is actually the opposite. Keeping this habit will help you have more control with your money as in comes and goes.
If you feel that you cannot follow all the other divisions since your expenses are quite big, you may follow this:
FFA - 10%, SFE - 1%, FEA - 1%, RAR - 1%, EE - 86% and GAC - 1%
This way, you will still be able to follow the management more comfortably. Remember, it is not the amount but the habit that is important. A few hundreds today may soon be billions with the help of these six different money accounts.
