How to Manage Money Properly?

Posted by Grace under Personal Finance on September 6, 2014

Learn how to manage your money properly today. Money is a very useful tool to enjoy life whenever or wherever we are. The benefits of a well managed finances will discuss in this article, focus your attention in every detail of this guide. Rich people are excellent money managers, we should make them a good role model on how to handle our hard earned money. Whatever your financial situation today, make sure you will apply what you learn in this simple guide.

Try not to waste even a single cent, if you prove to yourself, to anyone and to the universe that you can manage a small amount of money well, then that is the time you have the rights to manage massive amount of money into your life. Isn’t it great to handle millions and billions of money? Isn’t it wonderful to manage massive amount of money?

Maybe you think managing millions and billions is a lot of stress, or you think it is not cool, then, this guide is not suitable for you. Maybe you ask, how can I manage money if I have no money? That’s a good question you should ask yourself, why you have no money in the first place. Second, don’t you think even a single cent can consider a money. You will start to have cent before you can have your first millions. Remember, every single cent is very important.

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I remember, the last time I deposited money in my bank account, the teller is looking at me as if I am from the planet mars. I collect and save a P0.10 and P0.05 that has a hole in the center of the peso coin. That was the first time I deposit money in my bank account that has “cents” amounting to P11,568.66. I was so happy because I knew I didn’t waste even a single cent from my hard earned money. Know the reason why you should manage your money well, learn great money lessons from the rich.

Know the difference how poor and rich handle their money. I learned this guide and principles to my favorite author: T Harv Eker – the author of the “secrets of the millionaire mind”. Poor people know how to make money but they mismanage their money while rich people know how to manage their money properly. I want to focus on how rich handle their finances. A conclusion, they will not became rich if they are not aware on what is going on to their finances.
 
Now, let’s take a look at this money management guide. Please be serious about this guide. If you are ready in taking care of your finances, then do the following.
 
Important Things 
1.Financial Freedom Account
2. Financial Freedom Jar
3. Play Jar
4. Necessities Account
5. Education Account
6. Long Term Savings for Spending Account
7. Give Account

Manage Money Properly Using jars

I only have to talk about how to apply this guide practically. Not every readers of InvestmentTotal.com are rich or interested in personal finance. Let me just use the word account into “jar”.

There are 6 of these jars namely financial freedom jar, play jar, necessities jar, education jar, long term savings for spending jar, give jar. Let just use “jars” instead of bank accounts. But eventually you will transfer the money from your jar into your bank account. Have you noticed about the phrase above about my “cents”. I saved a lot of peso coins, even cents because of these jars.

How to Manage Money Properly?

Put the money you have in different jars and once a month get these money and deposit in your bank account. When you receive money, either business profits, salary, bonuses, allowances or other sources, put money in the jars according to its allocation percentage.
Financial Freedom Jar: 10%
Play Jar: 10%
Education Account (Jar) 10%
Necessities Account (Jar) 50%
Give Account (Jar) 10%
Long Term Savings Account (Jar) 10%
 
Now let us discuss the uses of each jar, take note that this guide is not for everyone, rich people know about this, maybe you say I am ‘cheap” but I can say confidently “I am rich”. How do you know I am rich? It is because I manage my money well, even a single cent. I can also say you are “rich” because you will apply this simple and practical guide on how to manage your money well.

Financial Freedom Jar

The use of this jar is to help you save money and invest this money for your financial freedom. Example, if you receive P100 you should put P10 in this jar, if you receive coins as your “change” or “sukli” after you bought some goods, or from transportation fare, or someone give it to you. Once a month you have to get the money in this jar and deposit in your bank account.  An account use for your investment.
 
Did you get the point? A money from financial freedom jar to your financial freedom account. The jar and account should consider as “no touch” zone. Of course when you receive a lot of money, then do not put in your financial freedom jar, instead put directly in your financial freedom account or the investment accounts.

In my case I have financial freedom account namely: COL Financial for my stock investing. For my mutual funds investing I have First Metro Asset Management Inc. Save and Learn Equity Fund and Philequity Fund Inc. For my unit investment trust funds I have BDO UITF Equity.

Play Jar

The use of the play jar based on my understanding is to balance my finances. A 10% of your income should be place here, and once a month treat yourself and feel rich. Go somewhere and have a massage, just feel rich. Buy what you want, treat yourself in a fine dining restaurant.
It is true that we can invest without sacrificing our happiness. The role of the play jar is to enjoy your present life while you are waiting for your financial freedom – the role of financial freedom jar/account. This is very important. Some investors are feeling guilty because they are not enjoying their hard earned money. They invest but they are not happy in their current situation. Balance your life and your money as well.

Education Jar

The role of this education account or jar is to help you acquire knowledge in whatever aspects you want to learn. Put 10% of your income or received money in this jar.
Once a month the money you have in this education jar will be use for attending seminars, buying books or when you need a financial advisor. I have bought important business and finance books because of this education jar.
Books like “cashflow quadrant of Robert Kiyosaki”, 8 Habits ng Masayang Milyonaryo by Bro. Bo Sanchez, Think and Grow Rich of Napoleon Hill. Wealth within your reach (2 series) by Mr. Francisco Colayco. You can be rich by David King. The science of getting rich and more. I also bought “entrepreneur” magazines. I think the books and magazines cost a total of almost P3,000.

Necessities Jar

A jar use for your basic needs such as paying your electricity, food, transportation and other necessary things. The money you have in your necessities jar should not be spend in buying items that you don’t really need. If you want a new phone, then use the money in your play jar. Want to watch a new movie in the cinema, then, use the funds in your play jar. Never use the jars inappropriately. Buy the things you and your family really need, not just “wants”. Example, a food is a need but watching movie in the cinema is just a “want”.

Give Jar
You have to have a “give jar”, whenever someone is in need, give help and use the funds in your give account jar. When you go to the church or any evangelical missions, use the fund in this jar. Tithing is very important, put 10% of your income in this jar and offer it with holiness. Make sure you are happy when giving, the happiness in giving is not what you give but the giving itself. Give with joy in your heart. Many people believe in the saying “it is better to give than to receive”.
But for few (the rich) believe “giving and receiving” are both important. If you are willing to receive amount of money, then the chances are you will become rich faster. Show and prove that you are willing and deserving to receive massive amount of money. You can’t give what you don’t have. Start having “money to give”. You shouldn’t say, oh I am investing, maybe sooner or 30 years from now I will give and offer a lot.

Long Term Savings for Spending Account

Is it confusing? Will you save for a long time and just spend? Yes it is confusing, but the use of this jar is to spend this for business and create a passive income. Put 10% in this jar whenever you received money. Do you want to buy a car? Do not use the money in this jar.
Do you want to build and start you own business? Then the fund is what you need. That’s why, if you are planning to start your own business after 2 years try to fund this jar and every month deposit the money in your bank account. When you are ready to start your own business, then you have saved a business capital. That’s the beauty of having this kind of jar.
Things Needed:
  • Bank Accounts
  • Investment Accounts
  • Glass Jar or Plastic Jar
  • Coins
  • Peso Bill or any currency bill

How to Manage Money Properly?

Open a separate bank accounts and investment accounts. One is for financial freedom bank account and the other is for long term savings for spending account. These two bank accounts are “no touch zone”.
Every month or every year invest your money in your financial freedom bank account and long term savings for spending account if you want to start your own business and create another passive income.  As for my investment accounts, I have on stocks, mutual funds and UITF.
 
Create a 6 jars in your home, put money in these jars according to their percentage allocation whenever you received money from your salary, business profits, changes, extra income, or form other people like allowances or gifts. 

Warnings:

This method is for those who are disciplined enough in managing their finances. It is not good to use the funds if it is not based on their needs. Play jar is for playing and treating yourself to feel rich. Financial freedom jar is use to achieve financial freedom.
 
Do not waste your money, buying things you don’t really need. They are just wants, so use your funds in your play jar.
 
If your kids or someone want financial assistance, do not touch your funds in any jar aside from your “give account jar”. Financial Freedom Jar/Account is for financial freedom. I should emphasize this phrase all over again. It is not good to touch or use the funds even if you are tempting and if it is necessary to touch the funds in your financial freedom jar. Building emergency funds and having life insurance is very important, if that’s your case.

Answer this 5 Simple Questions
1. You need to go somewhere (Disneyland) and want to have a wonderful experience. Which of these jars/account should you use?

a. Financial Freedom Jar
b. Give Account
c. Necessities Jar
d. Play Jar

2. Your friend is asking you for a donation or a gift. Which of these jars/account should you use?
a. Play Jar
b. Necessities Account
c. Give Jar
d. Financial Freedom Jar

3. You want to invest every month in your mutual fund account? Where should you get funds to invest?
a. Education Account
b. Necessities Account
c. Give Jar
d. Financial Freedom Jar

4. You heard a popular registered financial planner is having a seminar but has a fee of P700? Which of these funds should you use?
a. Play Jar
b. Education Account
c. Give Jar
d. Financial Freedom Jar

5. You are very generous, kind and loving man. You want to treat your spouse and kids every Saturday but on Sunday morning you must do a tithing – the holy offering inside the church.
a. Play Jar
c. Financial Freedom Jar
c. Necessities Account
d. Give Account

Answers:     1. D      2. C        3. D          4. B.        5. A&D;
 
Conclusion:
Money management can learn easily, as you can see even in this blog InvestmentTotal.com can learn this simple thing. Even though money management was not taught in the school or in your home, you can do it alone. No need to have an accounting subject or learn a very complicated financial terms. This is a very easy and practical guide and it is FREE. It will help you to learn how to manage small amount of money. If you can manage small amount, then there is a big chance that you can manage massive amount of money, too. Begin managing your money now, experience the beauty and wonder of money management. You can follow other money management tips if you want, some people use envelopes. The important thing is you are practicing the habit of the rich men – they manage their money well.

6 Things to Consider Before Investing

  1. Have an emergency funds / cash reserve that is equivalent at least 6 months of your income. An emergency funds are important because whenever emergency arises, you will never touch your investment funds. 
  2. A life insurance, this will serve as your income protection. The face amount should be at least 3 years of your annual income. A 3 year means, the time to recover. I know you know what is the importance of life insurance.
  3. Know your net worth. Your assets minus your liabilities, that is how you can compute your net worth.
  4. Pay your debt. You can use debt management, pay your debt every month until you became a “debt-free” individual.
  5. An investment plan, or we may call it as a financial road to success. When do you want to retire? At age 60? 65? When do you want to have your first million in paper assets? This time, you need to know your retirement target earning asset.
  6. Determine how much you should invest? When? After you have done the things above. Then you are ready to invest your money. Asking where to invest? 
Was this article useful? 
Then help spread financial literacy today. The article “how to manage money properly” was written by me as the owner and author of InvestmentTotal.com, please get in touch with this blog and learn more about personal finances. Do this practical guide and it will surely change your life. Have a great and successful financial journey. 

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