How To Manage Your Money For Financial Freedom

you hey guys Stefan here from as you can tell good and you look going on right now I shaved my head a few weeks ago for summer so not sure if you recognize me or not but we’ll see how it goes for the next few months but listen in this video blog I want to talk to you today about how to manage your finances and I’m going to share with you a system or ritual if you would that I’ve used every single week for the last four years that’s really transformed my life in this area and I’m also going to have a blog post that goes along with this video so make sure that you go on to project life master comm I’ll have a link to it in the description because I’m going to give this method to you I’m going to give you the spreadsheets the templates everything that I’ve used to really transform and manage my finances on a weekly basis now I will say that most people are totally clueless when it comes to managing money in fact most people they’re so focused on making more money and their job or their business they’re obsessed about it but they haven’t first learned how to manage what they already have and if you can’t manage what you have now even if it’s a small amount of money then going out there trying to make more money is not going to make anything better in fact you hear these crazy stories right where people they win the lottery that went a million dollars and then sure enough within a few years they’re right back to where they were before and the reason is is because the reason why they just spent all that money and everything is they didn’t know how to manage it they didn’t have the discipline the habit the mindset the mentality to be able to manage that amount of money and so developing the habit developing the mindset around manage your money now even if it’s a small money it’s not the amount that is important by the way it’s the habit the habit is more important than the amount but if you can learn how to do it then you’re going to set yourself up for success and you can actually get further ahead and a lot of people that are making more money than you because it’s not how much money you make is how much you keep and it’s being able to manage the money you have and reinvest it accumulate assets and build your net worth and financial freedom so those are the most important things if you want great books about this check out Rich Dad Poor Dad Robert Kiyosaki check out the millionaire mind intensive which is a seminar by T Harv vector also has a great book called secrets of the millionaire mind it’s a book called richest man in Babylon that goes more into managing your finances well but really make sure that you’re learning and studying this area your life because you know you need to have that foundation before you’re prepared to really start making more and more money now I’m going to share with you guys first how to track your finances and they go into that in a later point in this video and just kind of show you exactly what I do but tracking your finances is the first place to start you need to know exactly how much your income is every single month and what your expenses are I actually go over every single week what I do is I use a spreadsheet and I add up exactly how much I’m making every single week from my various income streams and that’s important because you need to be able to check and make sure that you’re making progress you know are you making more money this month and you were last month are you making more money than you were last year and you want to you know always be setting goals for yourself so you’re making more and more progress in that area of your life in terms of your income you also need to track your expenses you need to know where your money is going most people are shocked when they actually take the time to go through their credit card statements and everything them to see where their money is going and you might be surprised to realize like oh my god I’m spending all this money on eating out and you know not unless you actually tracked it on a weekly basis you wouldn’t be aware of that and you wouldn’t be able to make any changes in that area so for example you might realize that you’re spending all this money on eating out well now you can make an adjustment and start eating it you can start cooking more food you can start going to grocery store you can make those adjustments and that’s all possible because of the awareness that you have when you start to manage your money you’re going to see you know exactly where your expenses are and I think one mistake that people make is because they don’t manage their money they often get into debt you know I remember for myself when I first started the business years ago I didn’t know anything about this stuff and you know we’re making all this money but we were spending money like crazy and we believed that we were making money right that’s how we rationalize to herself because we had this money coming in but we weren’t paying attention to all the little expenses that were adding up on a monthly basis and it wasn’t until we actually looked at her finances and she wrote everything else we could see where everything was we came to the realization that we’re actually losing money every single month and we were getting in debt and that’s where you dig yourself a hole which is very difficult to get out of and that’s why if you start now you learn how to manage everything now then you will avoid some of those mistakes another big mistake that we made is we didn’t anticipate and prepare ourselves for taxes at the end of the year right in the first year of business we weren’t prepared for that we weren’t putting money aside we weren’t managing our money and sure enough we got into trouble later on and so that’s part of the reason why it’s so important to be able to track everything so that you can actually see that you’re having a profit right you got to make sure you’re having a profit every single month you can’t be living paycheck to paycheck you’re gonna have to make some sort of adjustments so that you’re seeing a profit okay so I’m going to go more into how to track your finances and the spreadsheet everything I use but the second most important thing is learning how to allocate your finances meaning you have a certain amount of money that comes in right you have a certain amount of money that comes in every single month from your job your business or income streams whatever it is right you have to allocate that money and put certain percentages in different areas okay so one model that I’ve used from T Harv Eker he has a book called secrets of the millionaire mind and he has a seminar called a millionaire mind intensive which I’ll have a link to in the blog post as well because I did a review of it last year but what he says is that 55 percent of your income should go towards your necessities okay so 55 percent of your income goes towards your rent your groceries or cell phone all your necessities in terms of daily living now the problem is that most people it’s like ninety or a hundred percent of their income goes towards the necessities and the problem with that is you’ll never be able to get ahead because you’ll never be able to save money you’ll never be able to invest money and you’ll just be living paycheck to paycheck and not really making any progress not building your net worth or your financial freedom okay so this is what he says 55 percent towards our necessities 10% of your income should go towards long term leavings okay long-term savings you don’t touch this money this money is long-term savings for something another 10% is a financial freedom account okay so you’ve heard about the philosophy of pay yourself first all the self-help books out there talk about this all the finance books talk about paying yourself first 10% of your money pay yourself first and I’m shocked to see how few people actually do that I’ve been doing it since I was 18 years old that’s always putting 10% of my income into investments mutual funds saving it the financial freedom account is anything that can help build your financial freedom anything that can start to accumulate passive income for yourself it could be real estate it could be stocks and you know mutual funds investments you know reinvesting that into a business but you need to have make sure that you’re putting money aside for that purpose so that you can really get ahead you can have your money to start working for you okay so 10% long-term savings 10% financial freedom another 10% is an education account you need to be taking 10% of what you earn and invest that into yourself book seminars coaches programs things that can actually make you better because you know warren buffett said the best investment today is in yourself it’s not stocks or real estate is in yourself and when if you’re not improving yourself and investing into yourself to make yourself better then again nothing is really going to change you’re not going to be able to reach your goals and get further ahead so you have to make sure that you’re investing in yourself also the other 10% is towards fun account okay so you have to be having fun you know 10% of what you make you should be doing things that you enjoy you know really having some fulfillment your life because if you’re just working to save and invest money and you’re not rewarding yourself by giving yourself any pleasure then it’s not going to it’s going to be very difficult for you to keep going with it unless you’re starting to see some sort of pleasure and taking the time for yourself to really enjoy life as well and the last 5% is a give account so 5% of what you may should be towards just giving to charities foundations and some form of making a difference so that was his model of allocating your money you know if you read the book the richest man in Babylon they have a somewhat similar model but you know what it comes down to is making sure that you have money left over every month so that you can reinvest it and you can save that money which is extremely important okay so I have a blog post so go more into detail of that and the philosophy is there but right now when I jump over to another video and I’m going to walk you through the spreadsheet that I use to manage my finances on a weekly basis and make sure you go to the blog and you can download everything that I use so that you can start applying it for your life as well okay guys so this is the template that I use to update and manage my finances every single week so first you can see that it’s a Google document I prefer to host it as a Google Doc that way I can access it from anywhere in the world from any computer and this is just the template that I use I modified it you’re going to want to customize it for yourself but I’ll have a link to it on the blog where you can download this and use it for yourself if you want and there are other systems out there there’s more sophisticated more elaborate um you know websites or whatever that can do some of this stuff for you but I prefer just to use something simple and you know a spreadsheet is really all you need and I’ve been using it for the last four years and its really made a difference for me and one thing I’ll say is that you’re going to want to pick a date out of the week that you do this so for me it’s every Wednesday up to my update my finances and the reason why you want to do it every week is that if you leave it to be every month then everything is just going to be too overwhelming for you and it’s going to take a lot of time to actually do this and I find a lot of people won’t actually do it if there’s just too much finances that you have to go over over the last month and so for me by doing it every week it takes me maybe 15 minutes to go through everything whereas if I did it every month it might take me an hour or sometimes more and so that’s why I like to make sure that I’m managing and looking over everything every single week and it really makes a difference for me that week because it gives me a lot of power and control over my finances and so the first thing I’ll do are the first thing you’re going to want to do is to make sure you change these income streams to whatever income streams that you have so for me I have multiple income streams actually have way out to here because I have a lot of websites and everything that pay me money but if you just have a job you know or one income stream they’re just going to want to have that here you can get rid of these ones you know if you have a side business or you know just anything else that can produce income for you you’re going to want to make sure you list it here and what I do is I come down here to August 2013 and I’ll go through the different income streams that I have and add up exactly how much of generated so far that month right here so for example one of my income streams is through coaching through my blog and so I make a consistent income for coaching and I’ll just have that label is coaching and I go through here and add up exactly what I’ve made so far for August for coaching right here it might be one of my internet businesses and I’ll go into Clickbank calm or might go into my Amazon Kindle account and just add up how much I’ve made so far for that week or that month for August and so I’ll have all the data in numbers here for that week so I can see exactly how much I’ve made and then right here is the total and I’ve already set up the formula where if you add in the income right here then it’s automatically going to total it right here and I’ll show you your annual income for the year as well and this is really good to look at this so you can actually see how much you know you made previous to the month before and how you’re progressing their expenses it is basically the same thing you know here you might have your rent you might have um you know your your phone bill your gym membership you know all the different expenses your groceries business expenses you might have gifts or books or seminars or all the expenses you have here and what I do is I go through my credit cards my bank accounts online and I basically add up everything for August that I’ve paid so far that week and so I won’t mention that I avoid actually using cash a lot just because it’s very difficult to track cash I prefer doing all my transactions on a credit card and plus you can generate a lot of points and stuff like that from that so I use credit cards for everything I make sure every week I’m paying off those credit cards so I’m not a queue you know a high balance or anything like that but I basically just kind of go through there and my statements and I add up exactly what my expenses were it totals it up and I can just compare say okay do this is what my expense was so far this month and this is what my income was and hopefully if you’re doing things right you’re going to have money left over and you’re going to be able to allocate that money effectively and you can also look at your annual expenses you know I just have a note here when I last updated this as well but you can modify it customize it make it more advanced if you want make it work for you but the important message here is is to make sure that you’re developing the habit of managing your finances every single week so you know exactly where your money is going and you’re using you know they say the secret to wealth is to spend less than you earn and invest the difference and so as long as you’re managing your finances and you’re spending less than what you’re making and you’re using that money to invest to build your assets to build your net worth then you’re going to be okay and you’re going to be able to be financially free so hope this video helps you make sure to go over the blog post to learn more about this and download this template I’ll talk to you soon have a great day