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Money Management 101

Mission: Organize your family’s money and create a plan that will propel your family into a better financial situation.

Introduction

For most homeschooling families, finances will be one of the biggest hurdles they face on their journey. Even if one or both parents work, managing your finances can create success or stress on your journey.  

I’ve learned a lot about life due to managing a business. Mostly, I’ve learned a lot about proper money management. Money can be very sticky or slippery depending on your approach. It doesn’t matter if your household makes $100 million or $60,000 a year; what matters is the amount once you manage your cost of living. If you make $10 and spend $8, you're worse off than the person who makes $7 but only spends $2. 

Before we discuss our implementation steps, I want you to understand that you must track and know where every cent goes. Money doesn't vanish on that one big expense. In most cases, it vanishes because of the compounding effect of continuous bleeding in small amounts. Stop the bleeding, and this will create an additional excess. Multiplying that new excess creates a massive impact on your life and wealth. 

We have all been there. You pull up your bank account, look at it, and then wonder, “Where the heck did all my money go?” If you are like me, you instantly think someone robbed you and start reviewing all the charges. My review usually goes a little like this: “Yep, that was me. Yep, that one too...Oh yeah, I forgot I bought that this month. Yeah, that’s mine as well.” In a matter of 3 minutes, I suddenly realize “I robbed myself.”

Implementation

Tracking: This task can help change the situation you currently face. It’s extremely hard to actively track your money, especially when you have kids and are homeschooling. It’s also extremely hard to barely have enough money to get by, especially when you become a homeschooling family. Like the adage says, “Choose your hard.”

For example, perhaps you buy a $3.50 energy drink from your local gas station. It might not seem like a lot when you buy it every day before work, and you work the normal 260 days a year. That's $910 per year that you spend. The right knowledge gives you the ability to run a “Risk & Opportunity Analysis” on all expenses.  

“Energy flows to where attention goes.”

Acquiring the SKILL of checking every day can start making a difference in as little as a week or two. Once you have reviewed your bank account enough, you will soon become aware of the potential impact every time you want to make a purchase. 

How To Track: 

Just start. If you need help, here are two ways you can build into your homeschooling success system…

Specific Times:

In the morning, while the house appears quiet, you can focus. You can reconsider your actions from yesterday to help formulate a plan, so you will stay on track with a clear mind and a fresh start. 

In the evening, while your family enjoys downtime or sleeps, you can review the positive or negative consequences of any spending actions that day. This allows you to build a game plan, so when you wake up in the morning, you can jump right into operating. 

Track and Document: 

Track your spending to see where it goes. This will give you information on your fixed costs as well as your variable costs. Keep all reports and documentation for the future. 

Track and categorize daily Income / Expenses

  • Fixed
    • Rent
    • Mortgage
    • Insurance
  • Variable
    • Eating out
    • Entertainment
    • Shopping
  • Reporting
    • Daily 
    • Weekly
    • Monthly 
    • Quarterly
    • Annually

Recommendation: Input all financial information into a Spreadsheet or even Notes on a phone.

  • Review 
    • Reviews (once a day to track progress) 
    • Once a week (after you become comfortable) 
    • Once a month (at the bare minimum) 

Recommendation: Keep your attention on where your money is, so you can stay in control. 

  • How to review 
    • Calculate total income
      • Work, side hustle, investments, etc. 
    • Calculate total expenses 
      • Fixed and Variable 
    • Total Income - Total Expenses = Net Profit 
    • Your net profit is the amount you actually made that month. 

Increasing Net Profit: 

Now that you understand how much you make, you must discover how you can grow that amount. See examples below:

  • Increase income 
    • New job
    • Promotion 
    • Side hustle 
  • Decrease expenses 
    • Make a budget 
    • Buy in bulk 
    • Cut unnecessary expenses 
    • Cook at home vs. eating out 
  • Invest profits 
    • Stocks 
    • Real estate 
    • Flipping or wholesaling items. 
  • A combination of the three

Note: The more you use these three financial tools, the more your money will grow. Try to grow your net profit and take action in all verticals. This can improve your financial situation.