Mike Michalowicz explains the Profit First system: split your money into six separate accounts for Income, Needs, Wants, Dreams, Fixes/Future, and Emergency. Seeing money in separate buckets stops you from spending everything and breaks the paycheck-to-paycheck cycle.
If you check your bank account at least once a week or once a day or multiple times a day, you are primed to be wealthy. That is the absolute definition of how we are wired. So, we just need a tool that leverages that. We're going to do it by doing 4 things. The first thing we're going to do is we're going to use a concept of portioning. Here is the problem with personal finances. If you have one bank account, you got a big chunk Cheerio bowl. And what our human behavior is, is here's the serving of cash, we consume it. No matter how much money you've made in your life. And I bet you make more money today than maybe you did 5 years ago. I bet you if you lived check by check 5 years ago, you may still live check by check today. The portion doesn't matter, it's the container. We want to set up 6 containers at your bank. First account is called income, needs, wants, dreams, Fixes/future, and the last one's emergency. I'm gonna allocate the money to these different plates so we know what's available.
