- Joined
- Aug 2, 2013
- Messages
- 592
Rep Bank
$2,540
$2,540
User Power: 377%
Hey guys,
Just wanted to share a quick money management tip that I've acquired and modified from a couple different books and Authors I like (Secrets of the Millionaire Mind, I will Teach You to Be Rich, & others). It's a bit of a variation of what I've read and I've tweaked it over the years, been using it for 7-8 years now I believe.
Multiple Designated Accounts.
The key to this system is building a habit where ANY money that you deposit will be designated & separated to all of your separate bank accounts. The money in these separate accounts can only be used for their designated purpose.
Here's an example:
*I use online banking and have free savings accounts for everything but my necessities (checking account) that I can transfer money to for free*
Example accounts I've used:
Necessities: This is for everything you need to survive (rent/personal mortgage, food, gas, car payments, bills, eating out, groceries, etc). I've gotten this down to 22% now. I definitely didn't start this low but with higher income generation and more assets I've been able to do this. I believe I started around 80% when I first created this system. Do what works for you.
FFA: Financial Freedom Account. This in my opinion is very important. Money that you don't ever withdraw--money that will be put towards investments or vehicles that will accelerate your wealth. You can withdraw the profit from what you generated from this if you want but never this principle amount.
Gifts/charity: This allows you to give back and not have to feel guilty or that you can't afford to get someone something.
Taxes: Obviously if you're working for yourself this will be important to set aside money that will go to taxes. If you're employed you probably already pay a good amount of tax and this might not be necessary.
Travel/Fun: Also very important. Having such diligence should be rewarded so this is an account you must spend simply on fun/travel/whatever you enjoy. This also makes it so that you don't feel guilty paying credit for a trip you can't afford or come back broke. I just went to SE Asia for a month and had enough in my fun account so that I didn't have to touch any other accounts. I came back with the same amount of money in all my accounts--including necessities.
Any other accounts: Do you want a new guitar? Create a guitar account. Want new wheels on your car? Pimp-my-ride account. You get the idea...
KEY BENEFITS:
1. Anytime you want to spend money, you already have a DESIGNATED ACCOUNT that you have to spend on whatever it is you selected. This creates peace of mind knowing you're not spending the money you need to survive.
Example: Most people around Christmas time go into debt spending money they don't have on gifts and there is some guilt that is built up around this and it also can create a bit of resentment. Having an account designated to "Gifts" makes it so that any time a gift is needed it's already accounted for and doesn't come out of your living income.
2. Create goals for yourself for future wants. Want to go on a trip to Australia? Create an "Australia" account with a designated amount. This also motivates to earn more to deposit into your accounts.
3. Become more accountable to your finances. Having this system will keep you from spending too much of your "necessities" money on useless things because you only have so much of it.
This is an easy (and fun?) way to start managing your money and taking control of your own destiny. Though it's quite simple, it's been highly effective and has been a great tool for growing my wealth over the years and also maintaining balance.
Just wanted to share a quick money management tip that I've acquired and modified from a couple different books and Authors I like (Secrets of the Millionaire Mind, I will Teach You to Be Rich, & others). It's a bit of a variation of what I've read and I've tweaked it over the years, been using it for 7-8 years now I believe.
Multiple Designated Accounts.
The key to this system is building a habit where ANY money that you deposit will be designated & separated to all of your separate bank accounts. The money in these separate accounts can only be used for their designated purpose.
Here's an example:
*I use online banking and have free savings accounts for everything but my necessities (checking account) that I can transfer money to for free*
Example accounts I've used:
Necessities: This is for everything you need to survive (rent/personal mortgage, food, gas, car payments, bills, eating out, groceries, etc). I've gotten this down to 22% now. I definitely didn't start this low but with higher income generation and more assets I've been able to do this. I believe I started around 80% when I first created this system. Do what works for you.
FFA: Financial Freedom Account. This in my opinion is very important. Money that you don't ever withdraw--money that will be put towards investments or vehicles that will accelerate your wealth. You can withdraw the profit from what you generated from this if you want but never this principle amount.
Gifts/charity: This allows you to give back and not have to feel guilty or that you can't afford to get someone something.
Taxes: Obviously if you're working for yourself this will be important to set aside money that will go to taxes. If you're employed you probably already pay a good amount of tax and this might not be necessary.
Travel/Fun: Also very important. Having such diligence should be rewarded so this is an account you must spend simply on fun/travel/whatever you enjoy. This also makes it so that you don't feel guilty paying credit for a trip you can't afford or come back broke. I just went to SE Asia for a month and had enough in my fun account so that I didn't have to touch any other accounts. I came back with the same amount of money in all my accounts--including necessities.
Any other accounts: Do you want a new guitar? Create a guitar account. Want new wheels on your car? Pimp-my-ride account. You get the idea...
KEY BENEFITS:
1. Anytime you want to spend money, you already have a DESIGNATED ACCOUNT that you have to spend on whatever it is you selected. This creates peace of mind knowing you're not spending the money you need to survive.
Example: Most people around Christmas time go into debt spending money they don't have on gifts and there is some guilt that is built up around this and it also can create a bit of resentment. Having an account designated to "Gifts" makes it so that any time a gift is needed it's already accounted for and doesn't come out of your living income.
2. Create goals for yourself for future wants. Want to go on a trip to Australia? Create an "Australia" account with a designated amount. This also motivates to earn more to deposit into your accounts.
3. Become more accountable to your finances. Having this system will keep you from spending too much of your "necessities" money on useless things because you only have so much of it.
This is an easy (and fun?) way to start managing your money and taking control of your own destiny. Though it's quite simple, it's been highly effective and has been a great tool for growing my wealth over the years and also maintaining balance.
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Membership Required: Upgrade to Expose Nearly 1,000,000 Posts
Ready to Unleash the Millionaire Entrepreneur in You?
Become a member of the Fastlane Forum, the private community founded by best-selling author and multi-millionaire entrepreneur MJ DeMarco. Since 2007, MJ DeMarco has poured his heart and soul into the Fastlane Forum, helping entrepreneurs reclaim their time, win their financial freedom, and live their best life.
With more than 39,000 posts packed with insights, strategies, and advice, you’re not just a member—you’re stepping into MJ’s inner-circle, a place where you’ll never be left alone.
Become a member and gain immediate access to...
- Active Community: Ever join a community only to find it DEAD? Not at Fastlane! As you can see from our home page, life-changing content is posted dozens of times daily.
- Exclusive Insights: Direct access to MJ DeMarco’s daily contributions and wisdom.
- Powerful Networking Opportunities: Connect with a diverse group of successful entrepreneurs who can offer mentorship, collaboration, and opportunities.
- Proven Strategies: Learn from the best in the business, with actionable advice and strategies that can accelerate your success.
"You are the average of the five people you surround yourself with the most..."
Who are you surrounding yourself with? Surround yourself with millionaire success. Join Fastlane today!
Join Today
