Although the Coronavirus is causing havoc in our lives, you still need to manage your money in order to build wealth. The sooner you start managing your money, the better off you will be.
Three Simple Steps for Managing Your Money
- Create a Budget
- Get on a Plan to Manage Your Money
- Execute Your Money Management Plan
Create a Budget
The first step in managing your money is having a detailed written plan for your money. You need to have a budget so that you know where your money is going. List all your income and all your expenses for the month. Give every dollar you make a job to do for the month. This is how you are intentional with your money.
Stop living by spending $10 here and $50 there with no thought given to it. Don’t go into a warehouse store for groceries and come out with a $2,000 TV! If you want a TV, you can buy a TV. Just have a plan for your money by having a monthly budget.
Get on a Plan to Manage Your Money
You need to have financial goals. If you are married, you and your spouse determine what your goals are together. Have retirement goals. Determine how much you will need and when you will need it. You can have a goal for buying a house, saving money, and getting out of debt, but make sure those fit into your long-term goals.
To reach those goals, follow a plan. The plan I follow and teach people is the Baby Steps.
- Save $1000
- Eliminate Your Debt
- Save 3-6 Months Emergency Fund
- Invest for Retirement
- Save for Your Children’s College
- Pay Off Your Mortgage Early
- Live and Give Like No One Else
Work the first three steps in order and one at a time. Once you get to step 4, work steps 4, 5, and 6 together.
Is this a radical plan? Well, when 80% of America lives paycheck to paycheck, any plan is radical! It’s radical just saving $1,000 for some people, and it’s radical not living with debt for others! It’s radical not having a car payment or saving enough for retirement!
The Baby Steps plan is not radical or complex. It takes behavior changes in order to build wealth.
Execute Your Money Management Plan
Having a budget and a plan is how you start to manage your money. You then need to execute your plan every single day of your life. This sounds hard, but you already execute your current plan every day. If you’re spending your money every day without giving it any thought, you are executing your current plan. It’s a bad plan, but it’s the one you are following.
Execute your money management plan by being intentional every single day. I know some of you want to know where the fun is in that. If it is fun being broke, then keep being broke! If it’s fun not knowing if you will have enough for retirement, then keep not knowing. Being intentional doesn’t mean you can’t have fun.
You don’t manage your money for just a few years. You don’t stop managing your money when you get out of debt. Managing your money is a life-time effort. Even when you reach step 7 and can live and give like no one else, you still manage your money. It’s like exercising. Once you get into the best shape of your life, do you stop exercising? If you do, you won’t be fit for very long. It’s the same with managing your money.
As your wealth increases, you might manage your money a little differently. Instead of working and saving, you might volunteer more and live on your Investments. You still manage your money, but you are doing it a little differently. No matter what, you stay intentional and have a written detailed plan every month.
Managing your money correctly is not complicated. Have a written detail plan every month, have a plan to build wealth, and execute that plan every day of your life. This is what managing your money looks like.