Do you have Good Money Habits?

On a personal note, I’ve been working on The Money Habit Certification and I passed the tests this week!

This is Mike Michalowicz’ latest book and put simply, it's Profit First for personal finance.

If you’ve paid even a little attention to me for the last 10 years you know I love bank accounts for managing business finances.

Here’s a little secret, I love it for my personal finances too.

For years now I have had a savings account for an emergency fund and a separate account for our “fun” money.

I have a credit card for meals and a separate account for travel.

After my long-term bank closed their branch in our town.

I opened an account at a local bank for access to cash.

I can do most of my banking online and I appreciate a national bank because we spend time in two states.

Rather than change everything, I just opened that local bank account for quick cash.

Once you realize the power of bank accounts to solve your money needs, then you see lots more possibilities.

The primary bank accounts for The Money Habit are:

Income - like Profit First the account that accepts the money to be served up for its purpose

Needs - for the necessities like rent, utilities and groceries

Wants - for the short term fun, like date nights or a special dress

Dreams - for longer term fun or calling, like a 2 week trip or a donation to a cause

Fix/Future - for paying down debt or then saving for something like a new car

Emergency – to build up a fund for the unexpected, a car repair or new a/c unit, or health crisis. The things we never can plan on.

Much of the Profit First Mindset carries through into The Money Habit.

One tweak that I really appreciate is the concept of seasons.

You see no matter our age or stage of life, we go through seasons.

From a money perspective Mike describes these seasons as:

Recover - prioritizing your needs and paying down debt

Fund - focus on setting aside cash for your dreams and the future

Activate - put your attention to building your wants and drawing down dreams all while living within your means

Balance - You are enjoying life today and preparing for tomorrow.

Using your season along with your income tier, Mike sets the benchmark for how much money should be allocated into each account.

In the same manner as Profit First, you allocate the funds every payday, or whatever pay schedule you are on.

We are currently working with a couple of beta clients on implementing this behavioral approach to money management for their families.

We start a group program for our team members in a few weeks.

If you are interested in working with us for your finances or for your team, let’s talk.

If you want to get started today, then think about your biggest worry.

Is it making your rent or mortgage payment?

Maybe you have a big insurance payment that comes due one a year?

Think about that one worry and open an account called your Clarity Account.

On the bank website you can label it Rent Clarity.

Then allocate the funds you need to cover that rent, in advance.

Say it’s $2000 and you get paid $1500 a week.

Every week, set aside $500 into that account so you can be sure you don’t have to worry about having rent money.

Of course, everyone has a different worry button.

Set up the bank account that will give you clarity on your worry.

I’d love to introduce you to the system that works with your habits and doesn’t require deprivation.

Who gets motivated by what you don’t get??

Send me a reply if you’d like to learn a better way.

Cyndi