A while back I attended a conference called the Wealth Summit and it changed the way I think about “wealth” and money management.
The presenters were great, the wealth information spanned a wide range (not just money), and the energy in the room was very positive. As positive as this experience was, the most profound memory I have from that Summit is a quote from the 16-year-old daughter of one of my friends.
She said, “I’ve realized that if I’m good enough to earn the money, I’m good enough to manage it myself.”
Kudos (and thanks) to my buddy for including his daughter on this journey. This simple and very insightful statement gets to the core of what limits people in all areas of life, including finance. The thinking that saving for the future and growing our own wealth is something that needs to be left to the “experts”. The thinking that advanced degrees and letters after a name provide the insight absolutely needed to manage money. Simply, the thinking that without these things, we aren’t good enough.
If you are reading this post, you are capable enough to handle your own funds. Just start with that. You don’t need a professional money manager earning 2% on your cash. In fact, you can become your own money manager and earn that profit yourself.
Here are a few simple guidelines to get started…
Don’t spend more than you earn. Yes, this seems like a no-brainer so forgive me. There are plenty of people out there who need to be reminded occasionally that if they earn $100, they should not spend $101. No judgment, just a friendly reminder.
Follow the Perpetual Wealth Code™. The 10-20-70 principle guides us to pay ourselves first (save 10%), limit our debt payments to 20% of our income, and allocate the remaining 70% to our lifestyle. The first step is the 10% savings, so start there. If you don’t have any debt (car/student/credit card) payments to make, save 30%.
Let your values set your budget. Once you have calculated your 70%, decide what you truly value. You should actually decide the values piece of the puzzle first, but you get the idea. I have friends who love Game of Thrones on HBO so it would be sacrilegious to even suggest that they cut back on their cable bill, while I have others who don’t even own a TV.
However you decide to allocate that 70% of your income, just make sure it lines up with your values and not someone else’s. And when it comes to the 10-30% number, remember our 16-year-old sage. You earned it, you can manage it. Reach out to me to talk further about the Perpetual Wealth Code™ and how to make it work for you. Also, if you are interested in seeing the Wealth Summit first hand, click here for details on the next event.