Most of us have a love/hate relationship with money.
Money rules our lives. Yet it has nothing to do with what’s important in life.
There lies the great dilemma with money: How do you reconcile yourself to something that is not important but is at the very center of your life?
The answer to that question is by removing all emotional ties to money. By controlling your money, and not letting it control you. In other words, you must become debt free. Otherwise, you are in slavery to your finances.
Think about it. Many of us are working jobs we don’t enjoy simply because of the pay. Many of us stress every month about some unknown expense that might pop its ugly head. Our bank accounts come skidding into payday week with about $1.50 left as the balance.
There are three things we can do with money:
- Spend it
- Save it
- Give it
To have a healthy, unemotional relationship with money, one must do all three. But how does one to learn to tame money? Unfortunately, personal finance isn’t something that’s taught in school (it should be).
The following are nine steps to help you tame your finances. You must master one before moving onto the next step:
- Identify all your accounts. I like to use Mint to do this.
- Take control of your spending by creating a budget every month. I like to use Microsoft Excel. I create a worksheet for every month.
- Live within your mean. This is where the training starts to get hard.
- Build your emergency fund. Save up $1,000. Put this money in an account that only has this emergency money in it.
- Live on last month’s income. Save up one month of living expenses and have this in an account that uses automatic billing for your bills.
- Become debt free. Pay off all your debt, except for your mortgage.
- Build a 90-day emergency fund.
- Build your nest egg and giving. Start putting money aside in a IRA or 401K. Follow the 10/10/80 plan (give 10%, save 10%, and live off 80%).
- Pay off your mortgage Once you have paid off these, you are a true financial superhero. Your spirit will be free. You will be able to give, safe, and spend as you see fit to help yourself and others around you.
Money is truly a superpower or a curse, depending on if you control money or you let it control you. Don’t let your money control you. Learn to harness this superpower.