So todays post follows on from yesterday really but if it was all together it would have just been too long for my blog as I like to keep posts short and to the point. So just dive right in and let me know your thoughts at the end by leaving a comment. Once again this is my opinion only and I cannot be held responsible for any actions you take regarding your finances after reading this post.
Today I am going to talk about how I manage my income on a monthly basis. This isn’t going into the details of what I spend where but how I split my income into different bank accounts for different uses.
Manage Your Monthly Income
Now this is something that can really help you out but I can’t take full credit for it as I learned it from someone else (I think it was my friend Glen but I think he may have learned it from somewhere else).
Obviously we should all make a budget each month and some people like to budget each week as well for more accurate money management. So let me show you how I divide my earnings and what each account is for. Each account is designated a percentage of my earnings and I only use the money in each account for what it is specified.
Current Account 60%
This is where all of my bills and regular outgoings are controlled from including food, rent phone bills & car expenses etc This is the main account that gets the most amount of use on a day to day basis.
Extra Savings Account 10%
This is my rolling savings account. The reason it is rolling is because I save for different things, whether it is a car, holiday or house the money goes into this account for those luxury items. 10% goes in here each month and once there is enough in there to buy whatever it is I am saving for I start again with another savings goal.
Education Account 5%
This is one that a lot of people don’t think about. If you are in business for yourself then there is generally a learning curve and there are all sorts of events and courses you can go on to improve your skills in your industry. All of these are tax deductible and well worth doing if you want to be making the big bucks in life!
Wealth Account 10%
This is your serious wealth building account. This is where you make your long term investments from so we are talking about things like gold and silver investments, and generally things that will give you a positive return over a longer period of time.
Charity Account 5%
Well this is another one that gets overlooked by most people. As you may well know charitable donations are all tax deductible so this is another account that can help to lower your tax bill along with your education account.
Play Account 10%
This is the fun one I really love this account. Every month you have 1 day to blow all of the money in this account on whatever you like. Now for me this is usually something fun like go karting or some new parts for my car but for you this could be anything you enjoy from shopping to spray tanning (not sure how much spray tanning costs but I liked having two things beginning with s).
So now you know how i divide my money up it is just a case of being disciplined with it all! This is the hardest thing for me by a long way! Obviously your percentages may change as your bills may be higher or lower than mine so your current account will need more or less funding each month. There will also inevitably be other expenses that crop up during the year which will mean you have to move some money around and usually for this I will either take it out of my wealth account or my extra savings account for this as it is more painful drawing it out from those accounts so you are less likely to do it on a regular basis!
I hope you enjoyed this part 2 as much as I enjoyed writing it. I would love to hear your thoughts on this so leave a comment below and I will get back to you as soon as I can!