1 © Relational Values Alliancerelationalvalues.com/thriveManaging Money: Five Buckets for Financial SuccessAs we reflect on our finances, we might assume that our income, or the lack thereof, is the real problem. We think we need more money, and then our problems will go away. This assumption leads us to work on making more money rather than managing what we already have. Nothing is wrong with contemplating ways to make more money, but a better starting place might be to focus on more effectiveness with the five things we do with our money.Five Things You Can Do With Your Money(1) Save it; (2) spend it; (3) give it away; (4) pay taxes; and (5) reduce debt. Sort money any way you want, and chances are it will be in one of these buckets.Here’s a more detailed breakdown: • Save $ Bucket: Setting aside money for future needs, goals, or emergencies• Spend $ Bucket: Using money for daily living expenses, purchases, and experiences• Give $ Bucket: Donating to charities, religious institutions, supporting causes, or helping others• Pay $ on DEBT Bucket• Tax $ Bucket: Paying various TAXES related to federal, state, property, and other taxes.Wisdom PracticeReflect on your finances and these five “buckets.” If you had to pick ONE of them: • Which ONE do you feel most secure about? • Which ONE might cause you the most stress?• Which ONE might need MORE priority at this stage of your life? Common Priorities for the Five $ BucketsDebt Taxes Spend Save Give We commonly start our list of priorities by paying our debt and taxes because we know we must pay them. Our second priority often means spending for living expenses, which includes all the basics like food, rent, clothes, auto expenses, travel, and entertainment. While these priorities are important and valid, they also lead to several common dilemmas.Common $ Dilemmas• Rarely is anything left over to save and give charitably.• Rarely anything left over after expenses. (i.e., “More month is left at the end of our cash.“)• We may be spending more than we make, so our debt keeps increasing.What if we turned all of this upside down and decided to give and save first and force our lifestyle to fit into the budget that remains?Enjoying Financial Stability and FreedomT.H.R.I.V.E. Solutions
© Relational Values Alliancerelationalvalues.com/thrive 2Wisdom PracticeHow might you describe any “misplaced” priorities in your monthly budget? • What expenses bring stress or undue pressures?• What tends to complicate paying off debts?• What seems to lead to overspending?“I probably need to review my expenses related to in my budget.“Re-prioritize Saving and GivingYou may have to start small and grow the percentage that is put into the “Give and Save Buckets” over time, but it will have many payoffs. Consider your SAVING plans: • Start by building an emergency fund. Save at least three months of living expenses in a money market account in case you lose your job or have unexpected, significant expenses. • If your employer matches your savings in a 401K, take advantage of it. • If you don’t have the matching option, establish an IRA and have 2–5% of your paycheck automatically transferred each month. Each year, increase the percentage that you are saving by 1–2%. • A long-term analysis will also help you determine how much to save over time. You may need a financial advisor to guide you. By starting as early in life as possible, you can take advantage of the magic of compounding-earning interest on interest.Wisdom PracticeWhat are the most important action steps with regard to your saving plans?“It will be important for me to .“ Focus on Generosity, Debt, and Living Expenses Research consistently indicates that the happiest, most content people are also the most generous! And if you have investments that have appreciated, like stocks, you should consider charitable giving with those assets instead of cash because the tax code allows you to sidestep the capital gains. Consider the use of a donoradvised fund to help with this. Click or scan the QR code for more information.Regarding debt, start by doing a fresh summary of what debts you have and the interest rates on each. Set a new goal: During the next year or two, you will get out of debt and stay there for the rest of your life! For your living expenses, keep track of your spending for the next 30 days. Most people often have the thought, where does it all go? But don’t take the steps to find out. Click or scan the QR code to download a budgeting spreadsheet to sharpen your grasp on spending!Now, ask yourself a life-changing question:Who could I invite into my financial world to encourage and hold me accountable to reach the goals above?