by Jay Moody

Created on: February 24, 2011

Having and executing an efficient money management system is vital to attaining financial independence and creating wealth.  If you live in a country with laws that encourage financial independence, following the steps below will work to help you create a more efficient money management system and a more abundant life. 

Take Responsibility for You Financial Situation

Recognize that you created your current financial situation because of your choices and habits.  Consider the Law of Attraction.  A person must accept that only they had the power to create their current situation and that only they have the power to change it.  Until a person accepts this first step their ship will always be blown by the winds of habit and impulse.

Save Money

Saving money is the single most important part of creating an efficient money management system.  You must spend less than you earn and save the rest.  Save one thousand dollars in an emergency fund immediately then shoot to save 3 to 6 months of expenses.  Save 10% of your income every month at the beginning of the month.  If you can’t afford to save 10%, save what you can afford even as little as 1% to begin with and aim for 10%.  Eventually after following these steps you should try to save as much as 50% of your monthly income.  Save all money that comes to you unexpectedly aside from your regular income.  This can include bonuses, gifted money, repayment of a loan and other cash that you have lived without.

Create a Budget

Dave Ramsey says “a budget is simply telling your money what to do rather than wondering where it went.”  Allocate money for all your immediate necessities.  First buy food and necessary clothing.  Second pay the essential utilities; water, electricity etc.  Next pay the house payment.  Then pay off debt.  Budget in some money for fun, but don’t go overboard.  Since income and expenses can easily fluctuate from pay cycle to pay cycle, write out new budget at the beginning of every month.

Develop Your Financial Vocabulary

It is amazing just how infrequently this step is ignored, but it is an integral aspect of money management.  Many people might say develop you financial education, but “education” is a vague word that doesn’t tell a person where to start.  That is why I say “develop you financial vocabulary.”  Robert Kiyosaki,

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