In my book, The Code: A Simple Story About Raising Women, a fictional story embedded with ten principles for parenting girls, I write about the need for mothers to mirror the four ways of allocating money to their daughters so that it becomes ingrained to the point where their financial freedom, self-expression and influence is greatly enhanced.
And because of the neutrality and universality of these principles, (which is why they are principles in the first place) anybody, business, government or nation can apply them for results. You can get The Code: A Simple Story About Raising Great Women free on Amazon Kindle. (today only)
So dive in with me:
1. Money is first for Investing. Every penny that comes to you must have a portion that you invest. Investing guarantees that you have money in the future to solve problems and live responsibly. One day, you may retire or want to afford yourself something ostentatious. You may want to leave a legacy for your children in form of an inheritance. Investing a portion of your income will help you with this. Have a wealth tax (a fixed percentage of your income) you apply on yourself so that, come what may, you ensure your ‘investment money’ is deducted first because of the future you want to have.
2. Money is next for saving. You save money for the rainy day. And while many may think that planning for emergencies is fine, rainy days could also mean days of opportunity. Have a portion of your money saved to cash in on financial opportunities.
3. Money is then for spending. After you have invested and saved portions of your money, and only then, should you spend on your needs. And this is the tricky part. People are hard wired to spend first because of the general orientation about money. But money should be spent third.
4. Money is lastly for sharing. There is a stewardship part to how we use money. The world’s richest man, Bill Gates says,
‘Money has no utility to me beyond a certain point. It’s utility is in building an organization and the getting the resources out to the world’s poorest.’
Sharing with others shows that we understand our connectedness to them; that we are our brother’s keeper and the money we make is a kind of trust from God to help improve ourselves and the world around us.
If you don’t train yourself to handle money like this, financial freedom will be elusive except you get financial miracle. And even at that, you won’t be able to sustain it.
A word of note:
- Investing creates money for the future
- Saving creates money for emergencies and taking opportunities
- Spending meets your needs
- Sharing creates goodwill
Have a great week!