There’s been a lot of information going around about how to be smart with money, how to invest wisely, where to save and things like that. While there is a lot of good information out there, the foundation of smart money management is really very simple. There are just three laws you need to keep. Follow them to reduce your financial worries (and increase your savings!).
Ready? Here they are!
1. The Law of 10 Cents.
When you keep this law, you take 10 cents of every dollar you earn or receive and HIDE IT. You can hide it in your credit union savings or share certificate account, in your mattress, or in a hole in your backyard. It doesn’t matter. Get used to living on 90 percent of your income while 10 cents of every dollar gets put away. Some people call this “paying yourself first.” Whatever you call it, follow this rule and you will soon be on your way to building a very comfortable nest egg.
You might think that 10 cents on the dollar is not going to get you very far. But consider this: you can get used to living on 90 cents for every dollar you earn, and after 10 months, you will have a full month’s salary put away. Not bad, huh? In 10 years time, you can technically take a year off. What to do with that nest egg? We can talk about that another time. Meanwhile, the important starting point is to get used to keeping the Law of 10 Cents.
2. The Law of Organization.
Quick: How much money is in your share draft account right now? How about your savings account? How much do you owe on your credit card? If you don’t know, and if it would take you more than three minutes to find out, you’re not keeping a law that’s easily kept. According to the Law of Organization, you should develop a clear picture of what is where at all times and update it frequently.
Set up a system for tracking all your accounts. Quicken is a good one, but there are others too. It’ll take a few hours time to set it up, but once you’ve done it, regular maintenance shouldn’t be more than 20 minutes a week.
Think also of how much you can buy with the money saved on late fees, insufficient funds fees, and all the other expenses of not having your finances in order. The Law of Organization will help you avoid all that and more.
3. The Law of Enjoying the Wait.
It’s widely accepted that good things come to those who wait. If you must have things before you have the money for them earmarked, you’ve fallen prey to the great American debt machine. The Law of Enjoying the Waiting states that you pay, and pay well, for having things now. If you can wait until later, and put money away specifically for the purchases you have in mind, you will have outsmarted the debt monster. No debt.
How much do you pay to get things sooner? Look at your interest rate and figure it out. Debt isn’t cheap. Think of how many things you could have bought with that wasted money! When you realize how much smarter is it to buy things when you have the money on hand, you’ll actually begin to enjoy the wait.