The Money Management Manifesto: How to spend freely, stay out of debt, pay your bills on time, and enjoy life- all without ever tracking your expenses.
Andrew emailed me in desperate need of help. He was discouraged, frustrated, and felt defeated. He was doing everything in his power to get his financial life in order. He tried to make a budget and stick to it, but after a month, he fell back into his old ways. He tried to make extra payments on his credit card debt, but after a few months noticed his credit card balances remained unchanged. He thought maybe he needed to make more money. So he worked on increasing his salary, but despite getting better-paying jobs, his financial situation didn't change.
He said, "every time I felt like I was taking two steps forward and getting ahead, something would happen, and it was like I was moonwalking three steps back."
Andrew was missing one big thing: a money management system.
Below are six signs to help you assess if you need a money management system or if it's time for an upgrade.
Sign #1: Reluctant use of credit cards
The first sign your MM system needs an upgrade is when you have to use your credit card reluctantly because you don't have enough money in your checking account to pay for expenses.
A sound money management system allows you to consciously spend money guilt-free and help you become aware of when you are running low on money. This way, you can gauge when you can spend more or need to slow down on spending.
Sign #2: Stuck on the Credit Card Treadmill
The second sign your MM system needs an upgrade is when you find yourself making a payment on a credit card with an existing balance and then proceeding to put a charge on the same credit card. I call this the credit card treadmill. You'll find you are putting all your effort into paying down credit card debt but seeing the balances stay the same. The credit card treadmill is a sign you are managing debt instead of eliminating it.
A sound money management system allows you to target debt independently so you can track your progress and never feel pressured to use your credit card unless you have the money sitting in your checking account to pay off immediately.
Sign #3: Transfer from Checking to Savings and Back to Checking
The third sign your MM system needs an upgrade is when you transfer money at the beginning of your pay period into your savings account and then transferring the money back to your checking account when you're short in your checking account.
A sound money management system prioritizes savings before you even start spending money or paying bills. It provides buffers in your accounts so that you never have to worry about overdraft fees and makes it difficult to transfer money in/out of accounts.
Sign #4: Low Savings Account Balance
The fourth sign your MM system needs an upgrade is if you have a hard time building up an emergency fund or having adequate savings to tap into if an unexpected expense comes up.
A sound money management system is prioritizing savings and outlines what's considered an emergency. The emergency savings account is also not located at the same place as their checking account. This way, it's harder to be tempted to transfer the money instantaneously to your checking account.
Sign #5: Inconsistent Cash Flow between Pay Periods
The fifth sign your MM system needs an upgrade is to feel like you're flush with cash during one of your pay periods and feel tight the next pay period. This example is a classic sign of an imbalance in cash flow between pay periods.
A sound money management system ensures your budget and cash flow are the same between your pay periods, so you have consistency.
Sign #6: You have no idea where all your money went
The sixth sign your MM system needs an upgrade is to have no idea where all your money goes.
A sound money management system knows exactly where every dollar. It even knows how to capture new money when you get a raise, get a tax refund, or a cash gift from a family member. Your money management system should know exactly how much goes to your bills, how much you can spend freely, and how much you can save.
Andrew's Results
Andrew saw all the signs, and once he implemented a holistic, scalable money management system, he was able to:
Save $15,000 emergency fund in less than one year
Implement an aggressive debt payoff plan and could track his progress of paying off credit cards, student loans, and his car loan
He knew how much he could spend every pay period and was happy to spend every cent
He could track his progress and for the first time in a while saw himself taking steps forward and not looking back
Next Steps
There are many people just like Andrew. If you found yourself reading the signs and experienced at least one of them, it's time to upgrade your money management system. Check out my Money Management package. The goal of this package is to help you create new spending habits, improve your current system, and organize your money, so it's predictable, dependable, and you can track your progress.