THE IMPORTANCE OF SOUND MONEY MANAGMENT
Your Financial Personality, your beliefs and your financial strategy are the three pillars on which your present financial situation rests. If you’ve read our last three newsletters, you now have a good idea of what you must change to improve your financial situation. However, the most important element is still missing: the method that will allow you to discipline yourself in order to limit the influence of your bad habits when it comes to handling your money.
The jar method
Made popular by T. Harv Eker, the jar method is indeed the most sensible. If you have children in the house, you should teach them this method as soon as possible, because even if they don’t yet have much income, it is essential that they understand the principles of wealth and that they’d develop good habits early in life.
To become a financially independent, you must ensure that your money works for you and not the other way around. For every dollar earned, you must therefore plan to divide it up into the following jars:
50% – Basic needs (housing, food, clothing, gas, school supplies, etc.)
10% – Long-term savings (RRSP, real estate, stocks, etc.)
10% – Supplies (emergency fund of three months salary, significant predictable expenses)
10% – Education fund or continuing education
10% – Pleasure (restaurants, travel, outings, gadgets, etc.)
10% – Charitable donations (if you don’t have the money, give your time)
Obviously, if for the moment your basic needs require more than 50% of your salary, you can modify the percentages, but do not eliminate any of the jars. Good financial health is in fact a simple question of balance. Discipline yourself in order to better manage your money and you will manage to increase your assets.
Do you see how this strategy can help you transform your financial situation? Share your impressions below in our comment section and pass this article on to your friends if you think it would help them. We all have more money than we think. One just has to focus on it to succeed.
FOR THOSE WITH THE PLANIFICATEUR "MY ATTITUDE" PLANNER, make an appointment with your financial institution and/or a financial advisor and open the accounts you need for your new financial attitude. Plan out pre-authorized transfers to make life easier.