The Four Masteries of Money, part four (#684)

(If you missed parts one to three, you can read them here: Part One, Part Two, Part Three)

The Fourth Mastery:
Managing Money

Managing your money is perhaps the most practical of the money masteries, and many of the basics of financial literacy can be easily learned online or over a coffee and donut at your local bookshop. (Just be sure not to get any donut crumbs on the books if you’re not planning on buying them later… 🙂

So instead of spending a lot of time on the details of how to manage your money, let’s take a little bit of time to explore what it entails and why it’s worth doing.

In its simplest form, effective money management answers three questions and involves three basic skills:

 

1. What’s your current reality? (Seeing)Seeing involves looking at your current financial reality without attempting to make things any better than they are or any worse than they are. In short, it involves looking at your finances – what you’ve got, what you owe, what comes in and what goes out – without your story about “the way things should be” and “what’s wrong with me/the economy/my parents/my business/the world”.

Seeing clearly matters because you can’t do anything about what you don’t see. If you don’t see the giant wrecking ball headed for your head, you can’t duck; if you don’t see the yellow brick road, you’re going to find it awfully difficult to get to Oz.

2. What do you intend to do about it? (Planning)

Planning is primarily concerned with where your money will be coming from (i.e. business plans, career planning, and investment strategy) and where your money will be going to (i.e. budgeting and spending plans).

Why does planning matter?

Because, as the saying goes, failing to plan is planning to fail. And even though you might not follow the plan exactly as laid out, the act of laying it out is in and of itself an essential part of the creative process.

3. What are you actually doing about it? (Tracking)

Tracking your income and expenditures can be as simple as carrying around a notebook in your back pocket or as complex as hiring a team of bookkeepers to pore over your receipts and deposit slips and create spreadsheets with full color pie charts. (To my dismay, my bookkeepers wanted to charge me so much extra for the full color pie charts that I opted to keep the extra money, buy some actual pie and share it with my daughter Maisy. We gave the receipt for the pie to the bookkeepers and it showed up as a “dining” expense on the next spreadsheet…)

Simply put, what gets measured gets done – and not only does the act of tracking your expenses tend to reduce them, when you track your income it tends to increase!

As your skill at seeing, planning, and tracking your finances increases, your mastery over money will increase as well. And as you begin to master creating, accumulating, using, and managing money, you will also begin to experience more and more of the wealth and freedom that is your birthright.

Because ultimately, the mastery of money isn’t about money at all – it’s about you being able to live your life from your authentic, wonderful self.

Money is not, as far as I can tell, the secret to happiness – but getting yourself to the point where money is neither what gets you out of bed in the morning nor keeps you awake at night is a wonderful, wonderful thing.

Have fun, learn heaps, and may all your success be fun!

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The Four Masteries of Money, part two (#682)

Last week, I shared some ideas on how to begin creating more money as and when you need it – and indeed, whenever I teach the four masteries of money that is the skill that people seem most interested in learning. Yet I have always found it curious that most people in the United States will earn over a million dollars in their lifetime and still somehow manage to retire in debt or with less than $50,000 in assets.