How Rich People Spend Their Money
We all make money, but how we use it will determine where we go.
Successful people know that money is an important instrument of growth. However, we all have different value systems when it comes to money. One of my clients asked me about my spending habits, so I'm compelled to write about it here.
50% Living Expenses: Food, Rent, Clothes, Babysitters, Vehicles, Insurance, Utilities, Membership Fees, Taxes, and all other personal expenses belong here. Understandably, most people spend 75-100% of their income on their living expenses. This happens because they have created a greater need for money but won't admit it.
Truthfully, the majority of your money shouldn't even go toward living expenses. One guy told me, "As long as I pay the bills, I'm fine." However, if all you're trying to do is 'pay the bills,' then that's all the universe will allow you to do. If you want to be successful with your money, try adding more value to society. You can do this by increasing your contributions in the marketplace. Give yourself a raise so that you can save or invest your money.
20% Saving and Investing: For successful people, the only reason to save is to invest.However, if you haven't saved any money yet, consider deducting $25 out of every $100 you earn. Once you give up your impulse buying, it will give you financial peace of mind. Saving money can give you the confidence you also yearn for.
When it comes to saving money, you must have a purpose. For instance, I use my savings to re-invest in my business and employees. The key to success is pouring every single dollar back into yourself and those who help you succeed. It will multiply your assets and give you more money to save. Some people like to save for a rainy day. However, hoarding cash for an emergency isn't strategic, it's a foolish way of living fearfully. Save for a ‘Sunny Day’ and invest in yourself!
10% Luxury: Self-indulgence is necessary for anyone who wants to enjoy themselves. Every month, spend 10% of your money on entertainment, travel, and/or luxury. Do yourself a favor and enjoy the fruits of your labor.
When it comes to spending on yourself, there are two kinds of spenders: cheapskates and the frivolous. If you're cheap, buy yourself a Visa gift card and hang out with someone who loves to spend money. If you're frivolous, make a cash withdrawal once you receive new funds. Either way, spend money on yourself.
10% Education Fund: Education is the key to continued success. Whether it's via academic degrees, seminars, books, online courses, business coaching, or advanced certifications, you must allocate the funds necessary to expand your skills and mentality. Once you do, you will see the rewards.
Personally, the bigger my library gets, the larger my house becomes. As I write this, I have thousands of mentors through my books staring at me. If you want to make rapid progressions in your life, you must find the right resources and use them to leverage your position in life.
10% Giving: The only way you can receive money is if you give it first. If you give cheerfully, blessings will hunt you down. If you give fearfully, your conscience will hunt you down. We all give, but it's truly the spirit in which you're giving that will dictate your financial success.
While giving money charitably can bless you financially, you must be cautious in your approach. Often times, too many people give out of guilt or shame. Don't lend money to people who just 'need money.' Never pay off the debts of other people, even if they have a sad story. Be mindful of your giving and do it because you want to, not because you have to.
Upon reflection, I know that these suggestions are practical. However, there needs to be a system in place to dictate your spending habits. Try to create a ledger of some kind or reach out to me for special assistance. I'll be happy to help.
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