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Money management! Thomas Stanley, in his best-selling book, The Millionaire Next Door, surveyed millionaires and reported on who they are and how they attained their wealth. The results can be summarized in one short sentence: “Rich people are good at managing their money.” Rich people manage their money well. Poor people mismanage their money.
Money Supportive Habits
Wealthy people are not any smarter than poor people; they just have different and more supportive money habits. These habits are primarily based on our past conditioning. So first, if you’re not managing your money properly, you were probably programmed not to manage money. Second, there’s a better-than-good chance you don’t know how to manage your money in a way that’s easy and effective. I don’t know about you, but where I went to school, nothing related to Money Management was offered. Instead, we learned about several topics, which were not of any use in real life.
It may not be the most glamorous of topics, but it comes down to this: the single biggest difference between financial success and financial failure is how well you manage your money. It’s simple: to master money, you must manage money.
What is First! More Money or Its Management
Poor people either mismanage their money or avoid the subject of money altogether. Many people don’t like to manage their money because, first, they say it restricts their freedom, and second, they say they don’t have enough money to manage.
As for the first excuse, managing money does not restrict your freedom—on the contrary, it promotes it. Managing your money allows you to eventually create financial freedom so that you never have to work again.
As for those who use the “I don’t have enough money to manage” rationale, they’re looking through the wrong end of the telescope. Rather than say “when I have plenty of money, I’ll begin to manage it,” the reality is “when I begin to manage it, I’ll have plenty of money.”
Saying “I’ll start managing my money as soon as I get caught up” is like a heavyweight person saying “I’ll start exercising and dieting as soon as I lose twenty pounds.” It’s putting the cart before the horse, which leads to going nowhere…or even backward! First, you start properly handling the money you have, then you’ll have more money to handle.
Story of Triple Scooper
Here is one story, that hits most people right between the eyes. Imagine you’re walking along the street with a five-year-old. You come across an ice cream store and go inside. You get the child a single scoop of ice cream on a cone because they don’t have any cups. As the two of you walk outside, you notice the cone wobbling in the child’s tiny hands and, all of a sudden, plop. The ice cream falls out of the cone onto the pavement.
The child begins to cry. So back you go into the store, and just as you’re about to order for the second time, the child notices a colorful sign with a picture of the “triple scooper” cone. The child points to the picture and excitedly screams, “I want that one!”
Now here’s the question. Being the kind, loving, and generous person that you are, would you go ahead and get this child the triple scooper? Your initial response might be “sure.” However, when considering the question a little more deeply, your final response will be “No.” Because why would you want to set the child up to fail? The child couldn’t even handle a single scoop, how could the child possibly handle a triple scoop?
The same holds true when it comes to the universe and you. We live in a kind and loving universe, and the rule is “Until you show you can handle what you’ve got, you won’t get any more!”
You must acquire the habits and skills of managing a small amount of money before you can have a large amount. Remember, we are creatures of habit, and therefore the habit of managing your money is more important than the amount.
Way Ahead
To start a money management habit, open a separate bank account designated your Financial Freedom Account (Investment Account). Put 10 percent of every penny you receive (after taxes) into this fund. This money is only to be used for investments and buying or creating passive income streams. The job of this account is to build a golden goose that lays golden eggs called passive income. And when do you get to spend this money? Never! It is never spent—only invested. Eventually, when you retire, you get to spend the income from the fund (the eggs), but never the principal itself. In this way, it always keeps growing and you can never go broke.
Emma’s Financial Freedom Story
One of the writer’s students, named Emma, recently shared her story. Two years ago Emma was about to claim bankruptcy. She didn’t want to; however, she felt she had no other option. She was in debt beyond what she could handle. Then she attended Harv Eker’s Seminar and learned about the money management system. Emma said, “This is it. This is how I’m going to get out of this mess!”
Emma, like all the participants, was told to divide her money into several different accounts. “That’s just great,” she thought to herself. “I don’t have any money to divide up!” But since she wanted to try, Emma decided to divide up $1 a month into the accounts. Yes, that’s right, only $1 a month.
Based on the allocation system we teach, using that one dollar, she put ten cents into her FFA (Financial Freedom Account). The first thing she thought to herself was “How the heck am I supposed to become financially free on ten cents a month?” So she committed to doubling that dollar every month. The second month she divided up $2, the third month $4, then $8, $16, $32, $64, and so on until the twelfth month was $2,048 that she was dividing up each month.
Then, two years later, she began to collect some amazing fruits from her efforts. She was able to put $10,000 directly into her Investment Account! She had developed the habit of managing her money so well that, when a bonus check of $10,000 came her way, she didn’t need the money for anything else!
Emma is now out of debt and on her way to becoming financially free. All because she took action with what she’d learned, even if it was only with $1 a month.
It doesn’t matter if you have a fortune right now or virtually nothing. What does matter is that you immediately begin to manage what you’ve got, and you’ll be in shock at how soon you get more. Money miracles will occur once you demonstrate to the universe that you can handle your finances properly. (Excerpt from one of my all-time favorites ‘Secrets of the Millionaire Mind’ by Harv Eker)
“When money realizes that it is in good hands, it wants to stay and multiply in those hands.”- Idowu Koyenikan
