When it comes to finances and money, the majority of the United States’ population is illiterate and confused. This is the reason why ninety nine percent of the wealth is held by one percent of the population. It all comes down to knowledge because knowledge is power and if more people understood how money works and what they should do with their money, there would be more stories of people becoming wealthy. For that reason, in this article we will be discussing one of the best methods to keep track of and manage your finances.
It’s important to know how money works. Everyone knows how to spend it, and most know how to borrow it, for example as a loan or court appearance bail bonds minneapolis mn. But here we are going to learn about how to use it to build a better future.
Best Method For Your Finances and Money
The method we are talking about is one that many people know instinctively, but very few may follow because they don’t know the details of it. It comes from the book “Secrets of the Millionaire Mind” by the author T. Harv Ecker. In the book he labels the method as the six accounts which are the following:
- Financial Freedom
- Long Term Savings For Spending
- Education Fund
- Everyday Necessities
- Giving Back
The six accounts are there to help you manage the money you make by having a place for it to go instead of simply leaving your bank account each month. They are like imaginary jars in which you put in a certain amount and some of these jars get full and must be depleted each month in order for them to re-fill again. The percentages to put in each “jar” are as follows. Ten percent of everything you make goes into the financial freedom account. The money in this account is to never be spent or used and when you retire you should only live off of the interest that the account creates. In your will you should set the same instruction for the heirs of this account so that it becomes a multi-generational system of wealth creation.
Another ten percent will go into your long term savings account which is to be used for things like your children’s education. Your education fund should also receive ten percent of everything you make and is to be used to further your personal growth with things like books, seminars, and coaches. Finally, you should keep 55% of everything you make in your necessities account, ten percent in the play account (to be spent monthly), and five percent in the giving back account.
In conclusion, in this article we discussed the topic of finances and money and one of the most powerful ways in which you can manage these two things. People who wanted to save money in the past would use either envelopes or jars, but now we can have six different accounts online to manage them easier. The percentages we discussed are only the best rules of thumb and can be changed to meet your specific situation. You may only need to use 30% of your income for necessities so ply around with different percentages until you find the right balance for you.