Business Owners and Creatives...These Two Habits Will Radically Improve Your Finances and They're FREE
Hi Friends. Are you able to pay your bills but there’s nothing left to save or invest? Let’s fix that.. Today, we’ll look at two ways to improve our finances quickly and both of them are free!
Hi, my name is Lucas and I show business owners and creatives how to transform their finances. The first time I sit down with a client, which is free by the way (sign up here), I walk them through a 5 minute exercise to identify how much money they’ve been unintentionally wasting.
For most, it’s between 20-60% each year. Think about that.
If you knew how to retain an additional 20-60% of your annual income, how would you feel?
Most of my clients quit their side hustle and start to relax.
When implemented regularly, the two habits I’m about to share can help you capture that wasted money. Now let’s get to it. (If you prefer to watch the video, please check it out here…)
You Don’t Need A Budget
The first thing we can do to capture more of our cash is to have a plan for our money. Now, technically budgeting is plan but if you enjoyed tracking expenses and policing yourself each month, you wouldn’t be here with me.
Do budgets work, yes. Will we stick to them? Probably not. Luckily there’s an alternative… we can create a simple financial plan that requires very little effort. To do that, let’s take a closer look at how most of us spend money.
Let’s say that you just received a check from a client for $10,000. What do you do? Let’s say you have dinner with friends (-$300), upgrade your phone (-$600), pay the mortgage (-$2400) and then all of a sudden your car stops working (-$1800). Problem is, more bills are due (-$1800), you don’t get paid for another week AND, you never transferred anything to your savings.
Without a plan, the money goes fast and when we see a big number in our account, say $10,000, we tell ourselves that we have plenty so we spend on the fun stuff and push the boring stuff like bills and taxes to the back of the pile.
So there we are, living paycheck to paycheck, often borrowing on credit to get by. So what do you do? Let’s identify the problem and create a simple solution…
Problem #1: When we see a lot of money in our account, we spend like we have a lot of money.
Solution #1: Limit our access to large sums of money
Problem #2: We buy the fun stuff first, and put our responsibilities last.
Solution #2: Pay ourselves and our responsibilities first
For example: $10,000 comes in - instead of buying things right away, split it up and transfer it to your priorities FIRST. Put some in your savings ($2500), cover your living expenses ($2500), your business ($2500) and your taxes and debt ($2500). And then you pay bills from each of those accounts.
Instead of having $10,000 to spend however you’d like, in this example, you only have $2500 for living expenses which makes you much more accountable for your spending. At the exact same, you increased your savings by $2500, your business by $2500 and you can put $2500 towards your taxes and debt.
You could sit down each month and try to budget all of this out or, each time you get paid, you could take four minutes to split it up and then move on with your day.
Get it, Split it, Forget it.
It’s a simple plan that limits your access to large sums of money and it ensures that you always get paid first!
A while back I sat down with the Jensen’s who were making pretty decent money. Problem was, they were stuck in the feast or famine cycle, had $90,000 of debt and were wasting $200,000 a year.
I taught them a simple plan for their money and within three months they paid of $25,000 of debt. Within 12 months they paid off all $90,000 AND saved $100,000.
If you make decent money but are trapped in the feast or famine cycle and know that you’re not going to stick to a budget, create a simple plan for your money or feel free to use mine…
Split it up and take care of your priorities BEFORE you’re able to waste it on stuff.
And click here if you’d like to hop on a free call 1 on 1 call with me. I’ll show you how much of your annual income you could be keeping each year.
Pay Yourself First
And that brings us to the second thing you can do to quickly improve your finances…
Pay Yourself First!
I first read about the concept in the book Rich Dad, Poor Dad when I was nineteen but I didn’t actually try it out until I was thirty nine. Had I started doing it earlier, I would have soooo much more money but honestly, it didn’t seem like it would be that effective so I never tried it. But.. we live and we learn right?
Think about it like this…
We Get The Money, We Spend The Money, and then there’s nothing left to keep.
Each month we make sure that insurance companies, banks, the government and netflix get plenty of our money and because we give them their cut first, it leaves us with table scraps. It’s why you don’t have money once you’ve paid your bills.
Luckily, there’s a really simple solution.. All we have to do change the order…
Get The Money, Keep some Money and then Spend
By making this tiny little change, we‘re able to retain more of our income. I want to be clear, when I say Pay Yourself first, what I mean is to contribute to your financial goals first instead of putting them last. It can be money for savings, investments, paying off debt, whatever’s a priority for you.
Starting out, the Jensens had two financial goals: pay off their debt and grow their savings, which at the time, was empty. They implemented The Big Split and practiced paying themselves first. Within 12 months, they had saved $100,000 and paid off $90,000 of debt. Talk about quick results!
Let me show you How it Works:
First: Choose to make yourself a priority.
Second: Every single time you receive money, send a percentage to a savings or what I call, “the pay myself first account.”
And if you’re thinking, “Lucas, this all sounds great but I don’t have any extra money”… Of course you don’t, because you’re giving it away to everyone else first.
Let’s hop on a free call and look at your income and expenses together. Who knows, maybe you’ll be able to capture 20-60% of your income - imagine how good that would feel! it’s free to find out..
Lesson Recap
The first thing you can do to quickly improve your cash flow:
Create a simple plan for your money
The second thing you can do to quickly improve your cash flow:
Pay yourself first
Every time money comes in, send a little to the pay yourself first account, a little to your business, some to your living expenses, taxes, debts, whichever areas are most important to you. And you’d like to radically improve your finances like the Jensens, combine the 2 techniques and watch as your accounts grow rapidly…
If you know anyone that could benefit from this lesson, please spread the love and pass it along, it would mean the world to me. And if you have any thoughts or questions, I’d love to hear from. Leave comment. Thank you for your time and energy, I’ll see you in the next one.
- Lucas Z.