And make no mistake – if you have any money at all, you are a money manager.
Those of us not ranked among the financial 1% may not consider our relationships with money… well, managed.
But taking money in and sending money out is a system. Stashing money away and allocating money for growth is a system. Borrowing money and lending money is a system.
You’re a money manager – but you may not know what kind. And if you don’t know what kind, then you can’t perform an analysis of how well it’s working for you….
Although you could probably declare right off the bat whether or not you feel like you’re living in abundance.
No? What about prosperity?
Not that either?
The first step in repairing your relationship to money is knowing what it is.
Let’s start making that process easier by taking a stark look at where you are right now.
Asking the Million Dollar Questions
What kind of money manager are you? How insulated are you against tragedy? Are you anywhere near achieving your goals?
Pull out a piece of paper, and for every question that you answer “Yes” to, make a tally. Do you have…
- A source of income?
- A source of income from a traditional job?
- A source of income from a portfolio of investments (dividends)?
- A source of income from a business or enterprise that you own?
- Savings designated for an emergency over $500?
- Savings for a vacation?
- Savings for a good-debt goal?
- A credit score over 650?
- Any assets owned outright (paid off car, paid off home, etc.)?
Now make a separate tally list, and make a tally every time you can answer “Yes” to any of these questions. Do you have…
- Student loan debt?
- Medical debt?
- A car loan?
- A mortgage?
- Credit card debt?
- A balance left over every month after paying off your bills?
If you were able to tally “Yes” to most of the questions from the first section, you’re probably starting off in decent shape.
If you were able to tally “Yes” to most of the questions in the second section, then some work needs to be done.
Don’t Look Away from Your Future
Take that same piece of paper, and really think about how you’re going to answer these next few questions…
Do you have a projected date for when you’ll pay off your debts?
Do you have enough sources of income to protect you from instability (at least two)?
Do you have a goal that you’re working towards (business ownership, early retirement, paying for your children’s college, etc.)?
Do you have faith that you’ll make it, given your current circumstances?
The problem is that in order to succeed in the Western credit-based economy we live in, we need to know how money works. And we don’t.
If you’re paying down the minimum, or worse, deferring, your loans, you’re trapped in the rat race.
If your expenses every month total more than your income, you’re digging yourself deeper into that trap every pay cycle.
If you’re trying to save money and keep having your savings wiped out by emergencies, you’ll keep tripping over your own feet for much longer than you need to.
Now that you’ve answered these questions, you should have a decent idea of what kind of money manager you are.
A frugal forward-thinker? Your savings are in good shape. You’ve allocated different accounts for different purposes. You’ve got several income streams, and are protected from disaster. You’re on schedule to pay off your loans before they’re due. You’ve got big goals for your own prosperity and the credit score to pull them off.
Just skating by? Your savings are enough to cover a small emergency, like a broken-down car. You’ve got a checking and a savings account, and you usually have enough to cover your monthly expenses, though some months you leave a balance on your credit card. You only have one income stream, but when you don’t take too hard a look at your money, you don’t feel like you’re struggling.
In danger of fiscal insolvency? You can’t manage to keep your savings in decent condition, whether it’s because you have a big family and needs are sometimes unpredictable or because you have low to little self-control regarding your personal wants. You’ve lost track of what your goals for prosperity might once have been because you feel hopeless about your current condition. Living paycheck to paycheck and on borrowed time.
For those just skating by or in danger of fiscal insolvency, this is not the end!
This is not a death sentence.
Being realistic about where you are while you’re there is the first step to deciding where you want to go and what you want to change.
If you’re a frugal forward-thinker, then you’re in a great space to start taking steps towards building a prosperous future without having to stabilize yourself first, since you’ve already done that!