Managing your money well and making sure all your bills are paid is the first step to financial
freedom.
But if you don't know how to manage your money and pay your bills you're always gonna be
in distress and feeling that you can't ever get ahead.
In this video, let's fix that.
Because financial literacy isn't really taught to hardly any of us.
We grow up having to figure this out on our own.
So we have to figure out how to manage money.
How to earn money and then how to make sure that all our bills are paid and we can do
this thing called investing.
Everybody keeps talking about it.
In this video, I'm gonna walk you through 5 things you can do to manage your manage
well pay your bills and start moving the needle forward so you can actually start investing
and actually creating a financial future.
The very first tip is what I call the 70-10-10-10 formula.
Without the 30,000 foot view of managing money, you'll never actually get there.
So, this formula allows you to see the four buckets you're gonna put your money in.
The very first one is your needs and you probably gonna be in the 60-70% range for your needs
of what you earn.
So, ofcourse this is dependent on how much you earn but the first thing is you're gonna
make sure all your bills are paid.
This is your mortgage, you're car payment, your phone bill.
All of the things we need to make sure we get paid.
Then the next 10% is investments and we wanna see that continue to grow.
So, you start off with 70% as your need and 10% investment and our goal are to get the
70 down to 60 and that 10% investment up to 20.
You wanna transfer a 10% over to ou investing.
So, not only do we start building up our investment.
I actually suggest creating a wealth account.
About 7 years ago my wife and I is on a plane I was reading a book and it suggested creating
a wealth account where you automatically put 10% of your income into that account.
I start talking to my wife about it and we agreed that was the best thing to do.
So, we set up a wealth account and 10% of our income went into that wealth account for
years.
In fact, we still do that very thing today.
All of our money that we don't use goes into that investments but we still transfer 10%
into that investment account.
Because it reminds our brain and it reminds our finances investing is important.
The goal is to see that continue to rise but continue to invest...
The next 10% si fun.
I want you to out and have a little bit of fun.
I want you to go out and take the kids out.
I want you to have a date night.
I want you to go to a movie.
To have a little bit of relief because here's what a lot of people don't understand about
money.
If you don't spend some money you won't be able to train your brain to be wealthy.
By spending money fine dining is really important to you and having a really nice glass of wine.
Go out to dinner and do that.
Make sure you're spending that money on things you truly value that builds your wealth mindset
and then the last 10% is contribution.
Every single person should be giving and so, here's one of the things a lot of people look
at this and they would say, "Mike, what about savings?
Where is the savings on this thing?."
Here's why I started to forego savings.
My wife and I don't have a traditional savings account because we have an investment account.
Investing is far greater than savings.
Yes, you want a little account with a thousand or two thousand in it and just an ER fund
that can just handle anything that kind of hits you by surprise every month.
But saving a big pile of money doesn't really do you any good especially if the dollar in
America is losing value.
We wanna get that invested into something.
So, I wanna see your investment grow rather than your savings account grow and that's
a shift to significant upgrading of your financial mindset.
And the second thing you gotta do is work from a budget.
Nobody who earns a lot of money or has really good money management habits doesn't work
from a budget.
Nobody is good enough to just work by feel throughout the month.
Coz the truth is we feel sometimes that we're doing really good.
So we go out o eat and then back in the day when I was really tight on money as I look
at my finances and realized, "You know what, pizza had got more than our rent this month.
We might need to tone it back a bit."
The idea is to work from a budget allows me to see where my money going and make sure
I'm not spending money on things that aren't valuable in order to get me ahead.
I can tell you one of the mistakes I make early on in my life is spending way too much
money on things that didn't really build my future and where I wanted to go.
It's really easy to buy a food seat on a couch and just let life pass by.
That's really easy it's very simple to that.
It doesn't take much effort.
But it never brings people happiness and here's the reason.
Because we are built were wired to grow.
Were wired to change.
We're wired to continue to get better and once we step into that we're always gonna
be dissatisfied.
A budget creates guidelines for me to grow.
It's like soil, think about it like a garden planting your money on a budget allows it
to grow.
The ideas is by going through the month by feeling it feels like we have enough money
just not a great way to manage your money.
In fact, if I cans ay this in a long way.
t's kind of a childish way to look at our money and I did this for years I'm exhibit
a in doing this.
When I was in my early 20s I didn't know what I was doing.
I'm spending money I can have and put my family into a lot of debt one pizza at a time and
it can happen that way.
And so, I want to you have a budget and when my and wife got budget wasn't til our 30s.
We really start to tracking down our expenses out whole entire life change from a life change
from a financial perspective.
The think I like to say working with a budget s budgets are our boss.
See, the idea of having a boss is it direct us.
It should be leading us not just dictating us.
But bosses job is to manage people and grow and build people.
The word boss sadly is got to really negative connotation in our culture but I see this
as a really good thing.
It's an awesome thing to have a leader.
It's developing you.
So, what the budget is supposed to do?
It's supposed to tell me at the check out line line, "Hey Mike, don't buy them man.
You don't have room in your budget.
You don't have room to do that."
I guess of the budget talking that you don't have room in me.
But the idea is you don't have to do that.
You do not want to make enough money to make this decision.
So, lets put that back.
Lets continue to work on your earning and your money management and well come back and
get that one ready.
That's what boss does and that's what the budget will do.
That's why setting this up it can guide you towards real financial freedom.
But just running rough short through a month going by feel so no wonder were struggling
managing our money.
But it never ceases to amaze me when I see somebody walks into the finish line and pay
$200 of a pair of shoes and act like $10,000 for a coach si way too much money and I'm
like, $200 pair of shoes that you're probably gonna wear.
Maybe you'll wear all year.
Maybe you'll wear a couple of years and then it's gone versus a shift that can shift your
life and change it forever and we act like those are worlds apart.
That's where our mindshift has change.
I used to think this.
I use to go on and spend money on hunting clothes and fishing gear and doing all the
staff and I realized, this doesn't look like my financial future.
It doesn't allow me to give more.
It doesn't allow me to live more.
It doesn't allow me to spend more people.
It doesn't allow me to do anything.
It just seats and collect dust most of the year.
So we need to shift some things.
Before we go into our next tip on how to start managing your money and make sure your paying
bills.
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When managing your money and paying your bills have at least 1 goal you're working towards.
Because if you dont have you'll never gonna get there.
So, you wanna retire in 5 to 10 years?
Do you can make $2,000 of passive income?
Do you wanna make sure you get all your debt crash in the next 2 years?
What is your real financial goals?
Most people dont have one and were trying to manage money and pay their bills and that's
really the end of their desire.
My friends, life is way to short.
We need to have bigger goals and larger mindsets.
The only reason I'm working to manage my money and pay my bills now coz my goals is to get
to complete financial freedom so I can help all kinds of people.
That's what we need thinking.
If that's the way we saw money a lot of money will be attracted to our lives.
So, again, we got to have a goal were working towards and if we dont let's write one down
today.
tip number four is you got to have a system that works for you.
Whether that's a spreadsheet, a notebook, an app.
You've got to have a system that helps you manage money so you can quickly get a picture
where you are at in the month.
My brother and sister in law love YNAB.
You need a budget app and you use it all the time.
My wife and I are more spreadsheet people.
So, we track our expenses through spreadsheets and we track our expenses through spreadsheet
budget where were looking every month to kind of what were spending.
So, you have to use a system for you.
If hand written ledgers work for you my goodness go to hand written ledger out.
Come on, give it up team [inaudible].
But the truth is use whatever system works for you.
If that's the system you like use it but you have to have one.
I heard somebody say without system teams fail and let me tell you this, without financial
system your finances will fail.
In fact, Liane and I have even said in our relationship in our marriage without systems
for our relationship we fail.
Not understanding that on Friday night we call off a little early to connect together
as a couple.
Without having a systems like that without having some financial systems even we both
have agreed too and some connection system.
Meaning, time throughout the week and check in our connect when were both in different
states and travelling.
Those systems keep our marriage string and the truth of the matter is without systems
everything breaks down specially finances.
So, let's get a system that works for you.
If you're not really a tracker you've got to have something that atelast can track for
you.
Have somebody help.
If you're in a relationship or in your a marriage where one person is a little bit more number.
Another person is a little bit more free spirit.
Then get somebody whos the number person to put all the system together that everybody
can work in inside.
Help tracking it, it wont change.
I love what Darren Hardy said in his book The Compound Effect.
What doesn't get tracked doesn't change.
It's the same goes with financing.
We got to track it so we can know what to do with it and where were we what systems
and pieces of our lives we need to be sure up so that e can keep growing in our financial
picture.
After you manage your money well.
You've your bills taking care off it's time to invest like crazy and that's every single
dollar you can.
Liane and I did this early on, where investing was really important to us.
Because we realize early on and I learned this from my parents coz I saw their investments
really change to standard of living they're allowed to experience and they really have
and I really have growing up is they're able to own properties and invest.
I'm like, "I need to the same thing", now, Lianes family didn't do that.
So, when we came together that was a piece of value that I brought was lets invest and
the piece of value she brought is she's very good in seeing where we should be spending
money.
Let's cut it there that's not really a value in a really good system.
So, we made a good team and said, whenever were not spending were investing every thing
we can.
Meaning, were gonna drive a little but modest car.
We dont really need a really expensive car.
I'd rather invest and have financial freedom that have a $2,000 car pay.
That's not just my game.
I'd rather have freedom than a car.
Invest everything you can.
Coz the truth of the matter is once you invest everything you can for few years its not very
long when you can drive any car you want and still not really feel it in your finances.
But you have to invest every single thing you can.
Investing is the ultimate goal so that you can have freedom and you can start contributing
to the true cost that matter to you.
I also have a free gift that I wanna gift you.
I wrote a book called the seven secrets of managing your money and creating wealth.
Click the link in the description.
Go to that book, snag your free ebook and we email straight to you and you can start
reading and taking in the content that helps you build your financial future.
I'll see you on the next video.