Work like a dawg, but being a good dawg who manages her money
Last Friday, I got paid for one of my projects. YEY! And haven’t touched a single peso since I do want to start to discipline myself more when it comes to my money. Especially since I am now not dependent on a regular monthly salary.
I’ve read in a friend’s blog, Awesome Abundance, of a money jar strategy she and her sons use to manage their own funds, which she learned from Harv Eker, who wrote the Secrets of the Millionaire Mind. According to the book, Total net income received every month is divided into 6:
- 55% Necessities – regular expenses like food, transportation, utilities and other bills that help you live comfortably
- 10% Financial Freedom Account – investment money, which you NEVER spend unless it earns
- 10% Long Term Savings for Spending – savings for long term spending goals like a house, travel, etc.
- 10% Education – learning includes books, videos, seminars and more…
- 5% Give – Sharing what you have with others
- 10% Play – Of course! You need to treat yourself too!
You can actually tweak the percentages and the components. These are there to create the discipline in the use of your money. I’d like to divide my money into the ff:
- 50% Necessities – Bills, bills, bills! Plus daily expenses
- 10% Investment Money – Money which will grow on its own, whether through mutual funds, time deposits, and others. Suggestions here?
- 5% Long Term Savings – I’d actually like to save up for my own house or a culinary trip to Europe or, for shorter term, a new camera: the Lumix LX3 I’ve been wanting for my birthday. Cool right?
- 5% Contingency Fund – In case of any emergencies like sickness or acts of God (a.k.a. Natural calamities)
- 10% Education – I love to learn new things
- 10% Play – Of course! Of course! I think this is my favorite I’d actually like to increase the percentage of this…Hmmmm.
- 10% Give – Sharing to church or my charity of choice (Wow! I sounded like a celebrity there)
But upon review of my current expenses, there seems to be an imbalance. A large chunk of it, around 20%, goes to the investment money. Is this a good thing or a bad thing? I want to reconfigure my budget then to follow the breakdown above. I’m still thinking how to go about it.
Can you share any other personal money management strategies that work?
Live Wais-ly,
Juana B. Wais
I’m still new to the whole personal money management, and I’m still learning.
What I did before is I just took out 20% of my salary to be put into my savings account. The rest is for my needs and wants.
But now, I am scheming up ways on how to better organize and manage my money. Hehe. Great post dear, and I love the envelopes on AA’s site!
(I’m buying one later!)
In China, the average person’s saving is 50% lolz! If you have a lot of time, throw some of your savings in the stock market, if not, go get some bank notes or commercial notes