How to set up your
Money Management system

Patience is a virtue

(the fine print – ‘frustration is inevitable, but it will pass as habits build!’)

Be patient, give yourself time to set up your Money Management System. It’s likely that completing the above steps will take around 5 – 10 hours of your time. The good news is that the ongoing financial management once you have the system in place should only take you around an hour each month. That’s the equivalent of 10 – 15 minutes per week.

If you’re in a relationship and your spouse is the one investing most of the time in setting everything up, entering information into spreadsheets, transferring direct debits and the ongoing management, be sure to show your gratitude and appreciation during this set-up phase. It can be quite laborious at times!

If you’re the person putting in most of the effort to set the system up. It’s important to try not to feel resentful towards a perceived lack of assistance or motivation from your partner, as this is unlikely to help you take positive steps in the right direction. It might help to feel thankful about the contributions they’ve made to your relationship in other ways, especially with tasks that are undertaken where you feel very grateful you did not have to!

Successful money management takes two to tango in a relationship, so it’s important that everyone is on board and invested to make it work and along for the ride! This is by no means relationship counselling, just good old-fashioned common sense and years of experience with money management conversations.

There will most likely be frustration along the journey! Mostly with the service providers that you have to deal with to re-negotiate cost savings. It will take some time getting all your direct debits set up and record your expenses regularly. It may take time and dedication each week or month or so to track your spending and develop new improved habits. In an old gem of a book, the ‘Millionaire Next Door’, a long term study looked into habits of those who became wealthy verses those who didn’t. They discovered that wealth was not the same as income. In other words, they discovered that if you make a good income each year and spend it all, you’re not getting wealthier, you’re just living high! Wealth is what you accumulate, not what you spend.

The research study defined people as Prodigious Accumulators of Wealth (PAW’s) based on the wealth to income ratio. The opposite where called Under Accumulators of Wealth (UAW’s). Interestingly, the PAW’s had a high percentage of both spouses taking a vested interest in money management.

On average they invested nearly twenty percent of their household income!

In ‘Millionaire Next Door’, the seven factors that determined those who become wealthy were:

  1. They live well below their means (perhaps the most important word there is ‘well’). In other words, they were usually frugal!
  2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
  3. They believe that financial independence is more important than displaying high social status.
  4. Their parents did not provide significant or ongoing economic care.
  5. Their adult children are economically self-sufficient (could this be the greatest gift that you provide by taking these actions towards successful Money Management?)
  6. They are proficient in targeting market opportunities (if you’re reading this, it is a good sign you have this skill!)
  7. They chose the right occupation (that is, they chose the right occupation for their personal skillset and innate talent. Not that they became Doctors or Lawyers, mind you).

The author of ‘Millionaire Next Door’ articulates it this way, “Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline.”

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