Money Management 101

Mission:

The mission today is to teach you some simple accounting that will help you get your family’s money in order. This should allow you to create a plan that will propel your family into a better financial situation.

Intro:

For most homeschooling families, finances will be one of the biggest hurdles they face on their journey. It doesn’t matter if one or both parents work, getting the household’s money in order can be a fulcrum for success on your journey.

Running a business has taught me a lot about life. The area it's probably taught me the most has been proper money management. Money can be very sticky or slippery depending on your approach. It doesn’t matter if your household is making $100 million or $60,000 a year, what matters is how much of that is left over after your COL (cost of living). If you make $10 and spend $8, you're worse off than the guy who makes $7 but only spends $2.

Before we get into our implementation steps, I want you to understand: to build financial security, it takes you tracking and knowing where every cent you spend is going. Money isn’t lost on that one big expense. In most cases, it’s lost by the compounding effect of continuous bleeding in small amounts. Stopping the bleeding will create an additional excess. Multiplying that new excess is what 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: “yeah, 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 is the start of changing the situation you are currently in. I understand. 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 have kids and are homeschooling. “Choose your hard”

Take 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. Let's say you work the normal 260 days a year — that’s $910 a year. Giving yourself 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 fast as a week or two. It doesn’t take long. Once you’ve reviewed your bank account enough, you will become aware of the potential impact every time you are about to make a purchase.

How To Track:

- Morning: Use quiet time to review and plan.
- Evening: Use family downtime to reflect and strategize.
- Track and Document:
  - Fixed: Rent, Mortgage, Insurance
  - Variable: Eating out, Entertainment, Shopping
- Reporting: Daily, Weekly, Monthly, Quarterly, Annually
- Input info in a spreadsheet or notes
- Review Daily (initially), Weekly (as it becomes a habit), Monthly (minimum)
- Review = Total Income - Total Expenses = Net Profit

Increasing Net Profit

Ways to Grow:

- Increase income (new job, promotion, side hustle)
- Decrease expenses (budget, buy in bulk, cut waste)
- Invest profits (stocks, real estate, flipping/wholesaling)
- Combine all 3 for faster change