If you already have a budget that you stay on – ensuring that every dollar goes exactly where it is suppose to – including provision for savings and debt elimination, a forecast so you can look ahead and plan ahead, and constantly seek out ways to earn more money, then you are managing your money. However, when it comes to effective money management, there has to be a system in place where your money works for you. In other words, the bulk of your money should not be sitting in a safety chest, a bank checking account, or a low-interest savings account. Effective money management is ensuring your money is being maximized to its highest degree.
Now, I’m not saying or recommending that you clear out your checking account! Checking account has its place, and that place is to facilitate daily, weekly, monthly obligations where checks written for expenses can be charged to and cashed. What I am saying is that a checking account should not house the bulk of your money, and essentially should hold the minimum to cover your monthly expenses plus 25% of your monthly expenses. For example, if your monthly expense is $8,000, you should ensure you have $10,000 in your checking account each month. This 25% excess is used as a cushion, and will increase over time. After a few months say six months, you can then transfer this excess to a high yield savings account or invest it for a high turnover. Likewise, cash is king! And so by no means am I suggesting that you not keep ample amount of cash on hand. What I am saying is that you employ the bigger portion of your money to work for you. So yes, do keep cash on hand in your chest, especially for emergency use. This is based on my experience and what has worked for me as well as my clients, and so it is not gospel, but me divulging what has worked for me.
Consider a real estate property that you have purchased – whether fully paid for or mortgaged, and you are collecting rental Income every month from renters, you are maximizing your money’s reach and building wealth. In the same way if you have invested in shares of reputable companies, your money will have been increasing exponentially over time – high turnover return on investment (ROI).
Any opportunity you can take advantage of, that will allow you to use a little money to get a lot of money, is effective money management. Think about any great writers, say Danielle Steel (one of my faves), how many books has she written (once) and how many times have those books been sold endlessly without her having to rewrite the same books? How much did it cost her to edit and publish those books? And how long do you think it took her to recoup those expenses? What I’m trying to say is, you write a book once (a great book :), and you keep getting paid for it over and over and over again. And, did I mention royalties?
Planning to save means that you determine now where you want to be and then follow in a pattern of saving and investing that makes it possible to meet that goal. So like any other goals, set your money goals, and follow through to reaching them. You cannot reach your money goals without proper money management, and you cannot get to your highest financial capacity without effective money management.
There is no other thing (except for our physical health) that gives us peace of mind like having a healthy financial situation. A healthy financial situation allows us to live the kind of lifestyle we desire. Money in abundance gives us choice and access. Therefore, effective money management is essential if living the lifestyle you desire and often dream of, is important to you. Effective money management also ensures that our later retirement years can be spent enjoying the type of lifestyle we designed and planned for.
Earn More With My W.E.R.K. Your Money Making Genie workshop
This 8 week “werk”shop is designed to help you tap into your inner genius and capitalize what unfolds. You will learn my “TRIED & PROVEN” strategies for stacking, tracking and trapping your money inflow into systems that maximize R.O.I. We’ll kick-start week 1 with our W.E.R.K. Ethics & Organization, weeks 2 & 3 will be our Positioning Party, weeks 4 & 5 we’ll have our W.E.R.K. Smackdown, week 6 Coins Takeover, week 7 Fruition Soiree, and week 8 will be spent wrapping up and solidifying the processes we’ve used to get your money systems poppin’. In addition, you’ll be given access to our exclusive online “Werk”place, where you will get to participate and tune in with other W.E.R.K. Your Money Making Genie accountability partners. Learn more here.