Getting financially fit is actually quite simple, however many people don’t have the tools, knowledge or get the right help. Research has shown that the biggest factor in wealth creation was simply how much people chose to save. That’s why we always start with cash flow whenever we create a financial plan. To help you start your journey, here’s 3 simple things you can do to start making a difference for a fraction of the cost.
1) Create special purpose bank accounts
Establish different bank accounts for different purposes, to know how to do this download our Worlds Most Simple Cash Flow Plan by entering your details on our previous blog here.
This allows you to make sure you always have enough money for your basic needs as well as put aside for the things you want to achieve. You may have heard of Maslow’s hierarchy of needs, created by American psychologist Abraham Maslow in his 1943 paper, A Theory of Human Motivation. It is a 5 level pyramid where our higher needs can only be met once our lower and more basic needs are met.
According to psychologist Neel Burton from Oxford, UK. Maslow called the bottom four levels of the pyramid ‘deficiency needs’ because a person does not feel anything if they are met, but becomes anxious if they are not. Thus, physiological needs such as eating, drinking, and sleeping are deficiency needs, as are safety needs, social needs such as friendship and sexual intimacy, and ego needs such as self-esteem and recognition.
Structure your bank accounts so you can at least cover your Physiological and Safety needs, then you will feel comfortable enough to stop stressing and start focusing on your other needs.
2) Use REAL data – get serious
Don’t just guess your figures, get serious and see your ACTUAL expenditure through our online cash flow platform. This AUTOMATICALLY measures every transaction in your account/s and prepares summary reports to show you how well you are tracking to your cash flow goals.
It’s quite common for people to have no idea what they are spending when they first see us. When we go through an exercise to understand what people think they need to spend for a good lifestyle, it is often a surprise when compared to what they actually spend, which begs the question…where did all the money go? Well when you get real with the numbers, you know exactly where and if you know what you actually need, then it becomes an easy adjustment to bridge the gap.
The truth will set you free – embrace what you actually spend, recognise the impact it is having, whether positive and negative and then create a plan to change what you have to.
3) Rinse and Repeat
Repeatedly monitor your reports and KNOW where your money is going. Don’t stay in the dark. Make adjustments where you can each week and increase your savings…..it’s really that simple.
But you have to do the work. Just like thinking about getting fit doesn’t make it happen, you have to do the exercise to get results. You also have to do the work to be financially fit….
Each month make sure you have enough in each account to meet the payments from them. The actual amounts will take some time to get right, however make a start and commit to looking at your bank every week to make sure you are on track. To make sure this happens, book a weekly appointment with yourself in your calendar right now. If you have a partner, then invite them to the meeting it is essential you do this together.
In your weekly meeting, write down 3 things you will do the following week to make sure you are on track.
Watch the video to find out more.
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- A simple 2 page plan to improve your cash flow.
- See exactly what type of bank accounts you should have and how to use them.
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