When my wife and I got married, our mentors arranged for us to attend a course by T. Harv Eker called Millionaire Mind Intensive. That course helped deal with our mindset regarding money, it made us realise that we each had a certain “blueprint”, or rather understanding regarding money which was taught to us by family or society from the time we were born to the time we met.
Our mindsets regarding money were completely different – my wife believed that most of the money should be saved, and that we should not take up any debt because debt is wrong. I on the other hand, was raised with the mindset that money should be spent when you have it, and that rather than saving your money, it is better to take risks and invest the money. I also believed that debt – in some circumstances – was good, especially if the debt is to finance assets such as businesses and properties.
There are certain simple budgeting strategies I still remember from the course that have helped us that I’d like to share with you. It’s basically how to divide 100% of your money once you have earned it:
1.10% Goes to Your Financial Freedom Fund
From every rand or dollar that you earn, you put away 10% of it so that you can later purchase cash flow producing investments with it. You save up this money in order to invest in businesses, shares, and real estate in order to later get an income from these investments once you have fully invested. You keep saving and investing this money so that you can eventually replace the income from your job. Once the income from these investments can match or even exceed your salary, you will then gain confidence to keep investing, and sooner or later you will be financially free – if you made the right decisions – remember that your investments must always give you monthly cash flow, if not immediately then later. Keep reinvesting this cash flow until…
2.10% Goes to Your Long-Term Savings
Here, you are saving money that you would later need to either buy a car, furniture, put in a large deposit on your home, or any other big purchase. The good news about this fund is that if it happens that you do not need to purchase anything, then you can put it towards your Financial Freedom fund, purchase additional assets that will yield returns for you.
3.10% Goes Towards Your Education and Continued Learning Fund
You need to bear in mind that you must keep upskilling yourself, either through attending seminars, doing additional courses to better your skills, going back to school, hiring a coach, or reading business books habitually. This isn’t one size fits all, but make sure that you are continually increasing your learning. Remember that if you have children, then this fund includes their school or varsity fees. Make sure you make provision for them or put part of the money into your investments so that your investments can later pay for the fees.
4.50% Goes Towards Your Household Necessities
This part of the budget is for your bond, car payments, groceries, gardening or housekeeping related payments, electricity etc. Now, many people have been advised that they should spend 30% of their income on their bond payments, and 30% on their car – this method will delay you financially if you are to start out this way. It is usually better to rent a cheaper place where you will be paying 15% or less of your income, and then you can spend the same % on a car so that you can have 20% left to cover other household expenses, and some of your debts if you have any. Allocating only 15% of your income on your primary home will ensure that you can easily afford to save for your investments and education. This will give you a big advantage financially, and it will increase your credit worthiness since you will never be over-committed. Instead of buying a new car, buy a 2nd hand one, and use the money you saved there to increase your investments.
5.10% Goes to Your Play Fund
Your Play Fund is to reward you for being disciplined enough to keep to your financial goals. As you do all of the above, it’s important that you put aside some money to spoil yourself so that you don’t feel like you are working for nothing and end up blowing the money in your financial freedom fund or long term savings. Your Play Money is to save guard you, use it for whatever your heart desires. In our case, we would split the 10% into 2 – 5% for me and 5% for my wife. Each one goes out to buy whatever they like, and none of us can complain about the other’s purchase, even if it is silly 😊.
6.10% Goes Towards Giving Alms
It’s important that we help those who are less fortunate than us. And by those I do not mean anyone who is healthy, has two hands, and a well-functioning brain. I mean those who have gone through the misfortunes of life through losing loved ones – orphans, widows, and the poor in general. Setting aside money to assist them will bring you fulfillment and make you realise that you also play a big part in this world. For those of us who are believers, supporting your local church will be one of your top priorities, so don’t neglect them either. Remember, at the end of the day this is your money, the final decision on how it must be spent must come from you, don’t let anyone coerce you into doing anything you don’t like. Take advise but don’t take orders.
This course really helped my wife and I to understand how we should be allocating our money. And not only that, we found a way to balance our two extremes – we could save money like she wanted us to, and we could later invest all of it without worry since we had learned how to earned, and keep it – we just had to find a way to grow it. Before we attended Millionaire Mind Intensive, we clashed a lot because of our two different mindsets but we later learned that just like in everything else, there must be a balance.
I wish you success.
CEO, Quality Growth International