IT’S NOT WHAT YOU MAKE IT’S WHAT YOU KEEP

saving and spending

saving and spending (Photo credit: 401K 2012)

In order to be wealthy you have to choose to have more money than bills. Being wealthy is not about how you look, who you know or who knows you. It is a lifestyle, but that lifestyle is the practice of leaving as much money in your pocket as possible. I have clients with great incomes who over extend themselves by spending every dollar they earn and sometimes more. Even if you earn millions technically if you do not have enough money to pay your bills you are broke.  It doesn’t matter how much money you earned if you did not keep any of it.

I have also worked with people who made less than $100,000 a year and because they had great spending habits they had less stress, all their bills were paid, they could afford their lifestyle and they were not broke.

I often share a spending plan with my clients that I love so much. It is called the 4, 3, 2, 1 method. This one will keep you in line very easily if you follow it. It is good for self employed people too. Once you take out money for taxes you can begin splitting up your money in this manner. Your household expenses should be 40% or less of your earnings. The next 30% should go to meals, entertainment, rewards, shopping, travel and things of that nature. You should save and invest 20% of your money and the last 10% should go to gifts, tithes and charity.

For example, if you make $6,000 per month estimate your taxation at about $1,800.  This will leave you with $4,200; 40% of that is $1,680.  That should go towards things like mortgage, utilities, household maintenance and insurance. 30% of $4,200 is $1,260 and this amount should fund your dates, girl’s nights out, your basketball league, amusement parks and eating out.  20% of $4,200 is $840 and that should be split up between your savings and investment accounts.  The last 10% is $420 and that should be used to pay your tithes or if you don’t go to church often, use it as a gift and charity fund.  People will ask to borrow money, but do not loan it to them.  Just give them a gift and do not worry about getting it back.  It will come back to you 100 fold.

In order to do this you may need to live in a smaller house, drive a less expensive car and curb your shopping enthusiasm. I am not suggesting you stress yourself out being frugal or stretching every dollar. I am suggesting that you do not worry about whether you look wealthy because looks are deceiving. If you have a fancy car or big house it doesn’t mean you are wealthy; it means you have a lot of bills. And if your bills exceed the amount of money you have allocated to pay them you are broke in your fancy house.

Don’t be careless. Spend 20-30 minutes a day managing your money and earnings and you will feel wealthy, look wealthy and actually be wealthy.

Counting the zeros…Now That’s Presidential! 

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About Kiné Corder

Kine' Corder is a best selling author, speaker, and member of the Financial Therapy Association. Formerly a Morgan Stanley Financial Advisor and currently a Financial Therapist Kiné runs Presidential Lifestyle, a financial wellness company focused on wealth in all of it's forms. www.presidentiallifestyle.com View all posts by Kiné Corder

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