Here is a technique for building personal CF.
Set yourself up with 5 different areas (I call them accounts) from which to place and take money from:
1. Liability Account
2. Savings Account
3. Investment/Asset Account
4. Doodad Account
5. Tithing Account
Assign each of them a percentage that YOU can live with. This will depend on your own current financial abilities. The important thing to start doing is to PLAN for each of these areas and LIVE with your desicions. You can adjust as needed but you MUST contribute to each of them (unless you have NO liabilities then liabilities could be 0%).
1. Liability Account- 30% (the lower the better)
2. Savings Account- 15%
3. Investment Account- 30% (the higher the better)
4. Doodad Account- 15%
5. Tithing Account- 10%
Liabilities- I use this a a checking account. Money in is applied to my basic living expenses.
Savings- I try to keep 3-9 months worth of reserves in this area. And emergency cash here. Once I have a comfortable amount, I don't stop contributing, I transfer excess into another account (I try to distribute it, but usually I buy a doodad :smx4
Investment- Money in this account can only be used to purchase things that will aid in making my money make money!!!
Doodads- duh, anything I really don't "need" but I just want.
Tithing- I give to charities and places that give me spiritual strength.
I gave these ideas to my kids. It was up to them to do something with the information. I don't support their doodad habits and never have. They have always had to plan for their needed purchases for things like friends birthday parties or toys that they wanted.
My 11 year old just got his first job (I think that he is over paid). He did the negociating and he makes $20.00/week doing lawn care. He chooses to assign 10% to liabilities, 10% to savings, 10% to investment, 60% in his doodad account and 10% to tithing. He plans to give his tithing to a Boys and Girls Club. Sometimes he borrows from one account to the other but he manages it. Sometimes he will ask to borrow from me. When he does, I always charge interest.
He understands these concepts and hates the fact that he has to work for his money.
That is the message that I wanted him to get.
The major factor that he has going for him is that he did not have to work out from the rat race, he has an opportunity to develop a way to never enter it.
For the rest of us, by applying the "accounts" above, at least we can learn to manipulate where we are and visually create a way to escape!
Set yourself up with 5 different areas (I call them accounts) from which to place and take money from:
1. Liability Account
2. Savings Account
3. Investment/Asset Account
4. Doodad Account
5. Tithing Account
Assign each of them a percentage that YOU can live with. This will depend on your own current financial abilities. The important thing to start doing is to PLAN for each of these areas and LIVE with your desicions. You can adjust as needed but you MUST contribute to each of them (unless you have NO liabilities then liabilities could be 0%).
1. Liability Account- 30% (the lower the better)
2. Savings Account- 15%
3. Investment Account- 30% (the higher the better)
4. Doodad Account- 15%
5. Tithing Account- 10%
Liabilities- I use this a a checking account. Money in is applied to my basic living expenses.
Savings- I try to keep 3-9 months worth of reserves in this area. And emergency cash here. Once I have a comfortable amount, I don't stop contributing, I transfer excess into another account (I try to distribute it, but usually I buy a doodad :smx4
Investment- Money in this account can only be used to purchase things that will aid in making my money make money!!!
Doodads- duh, anything I really don't "need" but I just want.
Tithing- I give to charities and places that give me spiritual strength.
I gave these ideas to my kids. It was up to them to do something with the information. I don't support their doodad habits and never have. They have always had to plan for their needed purchases for things like friends birthday parties or toys that they wanted.
My 11 year old just got his first job (I think that he is over paid). He did the negociating and he makes $20.00/week doing lawn care. He chooses to assign 10% to liabilities, 10% to savings, 10% to investment, 60% in his doodad account and 10% to tithing. He plans to give his tithing to a Boys and Girls Club. Sometimes he borrows from one account to the other but he manages it. Sometimes he will ask to borrow from me. When he does, I always charge interest.
He understands these concepts and hates the fact that he has to work for his money.
That is the message that I wanted him to get.
The major factor that he has going for him is that he did not have to work out from the rat race, he has an opportunity to develop a way to never enter it.
For the rest of us, by applying the "accounts" above, at least we can learn to manipulate where we are and visually create a way to escape!
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