How to Handle Money

Do you want to know how to better handle money? Well, by the end of this video, you'll not only know how to better handle money, but you'll also be in a much better position to safeguard your finances in the future. Hi, my name is Eric Partaker and I've been recognized as one of the top entrepreneurs in the country and the CEO of the year. And I'm also the author of two best selling books including the Three Alarms. But most importantly for you, I've helped thousands of people realize their full potential and work and life. So please also make sure you hit the subscription button below and tick the notification bell so that you never miss a future video.

So step number one in getting a better handle of your money is to understand, well, where is your money coming from and where is your money going? So this is often referred to as your cash flow and it's simply looking at how much cash is coming in and how much cash is going out or, or in other words, your income and your expenses. Now, most people, they'll just have a single source of income. So that's a single, you know, take a sheet of paper, that's a single line, okay, this is how much income that I have in a month. And then below that, simply list out what are all the expenses and try to group those into their natural categories. So you'll have expenses which are more what they call fixed in that they don't really change much. So this could include your rent or your mortgage, if you own your home, your estimated utilities costs, a gym membership batch together, all those expenses that pretty much don't change into one category of expenses. And then below that you have what you would call your variable expenses. So just like the word implies, these are just expenses that vary. They can change from month to month. It could be, you know, going out money or money that you spent on food or clothing, you know, things like that. So step number one to get a better handle of your money is to understand where is your money going? So your cash inflows and your cash outflows or your income and your expenses. And you can do that on a single sheet of paper. Number two, you need to agree your priorities and your financial goals. So looking at that list of expenses, you need to ask yourself, are these expenses that I want to keep? Do you, do these expenses reflect the priorities in my life? And I want to challenge you here, don't just ask, do they reflect the priorities in my life? From the vantage point of your current self, but I want you to think of you at Your best, your best version of you, your best self, do those expenditures reflect you at your best? The priorities of you, the best version of you. And that's a yes or no. And then what adjustments would you make to those priorities? And then similarly, what financial goals do you have? So we need to understand what are our priorities for where our money should be going and what are our financial goals. So that's step number two. Number three, we need to create a budget. So once we understand our cash inflows and outflows, our income and expenses, what are our priorities? What are our goals? We, we need to create a budget. What would we like to do going forward? And a budget should include the expected income that we're going to have each month, and it should include in the expenses how much we're allowing ourselves to spend in each of those categories every month. And then when we get to the end of a month, we can check and see how close were our budget estimations with what we actually spent. Then we can make adjustments, either spend less or increase what we're targeting, you know, within the budget, within a particular category. But we need to create that budget first before we can start measuring our actual progress against it. Number four, and I want to completely flip how you've thought about this before. We need to create a savings plan, but we do that by changing the equation that we've been taught. So we were taught as kids and growing up that that income minus expenses equals savings. So savings is something that's left over in the end. That's not how it should be. What the equation should be, and this is also mathematically accurate as well, is that income minus savings equals expenses. And the reason we want to flip that those two around the expenses and the savings is because it forces us to prioritize and think of savings first. Pay yourself first before you start paying money to other people. What? When you go and you eat out somewhere, you're paying someone else. When you go and you buy some clothing, you're paying someone else. Pay yourself first. Take your income, determine your savings target, pay that to yourself first and then your expenses. Now, if this is all making sense to you so far, please put a yes in the comments below so that I know. Now you may say, well, I don't have any capacity to save, but I want you to get into the habit of saving. I want you to start with just 1%, even if that's all that you had. So, you know, let's say you have income of $2,000 in a month. Start with saving at least just 1% per month. So 1% is only $20. And you absolutely, 1% of 2,000 would be $20. And you absolutely do have $20. You could save $20 to the side, just 1%, just to get into that habit of saving. Number five, to better handle your money, I want you to build an emergency fund. A fund for when things go completely wrong and perhaps you're not able to work as much as you would like, or you don't have any work at all. And it can start with that 1% that you're saving monthly. Just start building up an emergency fund. Ideally, you would have enough money to cover yourself for at least a few months, all of your main expenses if you were to lose your job or if the company you were working for were to suddenly no longer exist. So create an emergency fund and use that 1% that you're starting to save monthly. And it can be more than that, by the way. I mean, don't keep it at 1%. 1% is just to get you into the habit of doing it by demonstrating that you can, if you start small, do it already right now. But if you could be saving 5 or 10%, by all means you should be doing that as well. But build an emergency fund so that you can protect yourself in case things go wrong. And if you're liking what you hear in this video so far, then let us know. Hit like down below. Number six is to invest your money. So if you start saving and you start also creating an emergency fund, you can also start taking a percentage and investing that money. And there's lots of different places that you can invest money. You know, you could invest with an index fund like Vanguard, for example. There's loads that you could find if you just do a quick Google search. But the point is, is get into the habit of investing at least a portion of your money on a monthly basis, because that money compounds over time. That's what leads to massive wealth creation over time is the power of that compounding. Number seven, if you have debt, we need to pay that debt off. And what I would suggest that you do is start paying off the debt that you could pay off the soonest if you were to maintain your minimum payments on all of your other debts and then put any excess, put any excess on one debt. But the secret is try to pay off the one that you could pay off the soonest. There's a psychological effect of seeing one of your debt accounts just disappear completely. That's very, very, very positive. And so once again, maintain your minimum payments, because they're the minimum. So you have to do that across all of your debts. But then anything more that you can pay beyond the minimum, pick the debt whereby you would pay that off the soonest if you were to dedicate all that extra expenditure towards that one debt, and then pick the next one. So quick question for you. Based on what you've heard so far, what percentage of your monthly income would you like to start saving and investing on a monthly basis? Let us know in the comments below. And number eight, last but not least, to better handle your money, you need to schedule a monthly meeting where you look at that budget that you created. You look at your expenditure against that budget, you make a decision on are we saving the same amount, are we investing the same amount, are we changing anything with our debt repayments? You need to do that by scheduling a monthly meeting. And I would literally schedule a finance review meeting, a kind of handling money meeting in your calendar once a month as an appointment with yourself and anybody else in your household that makes sense to join that appointment to join that meeting and make sure you're reviewing all this stuff on a monthly basis. This is how you get better at handling money. So I hope this was helpful. And if you like this video, then once again, if you please hit like down below. If there's a major takeaway that you have from this video, I would love to hear it. Leave a comment down below. If you think that somebody in your network would benefit from hearing or seeing this video, please share it with them. Also, don't forget to subscribe. Last but not least, I have some exciting news for you. I would love to give you a free digital copy of my new book, the Three Alarms, which has achieved bestseller status on Amazon and and for watching this video as a thank you, if you just go down to the link in the video description, follow that link and you'll be able to download a free digital copy of my new book. I hope you enjoy it.