Ever heard of “The Money Game”?

Besides being a heading title used in multiple financial magazines it is also a true game that can be played to learn to manage your money.
Try winthemoneygame for more information on the game itself.

By deciding to change my financial situation and strive for financial freedom, I had to learn how to play the Money Game and manage to optimize 5 important elements:
• Working Income
• Savings
• Investments
• Passive Income
• Simplify your Life
All 5 elements have to work together to have the correct impact.

In one of the earlier blog posts I talk about what Passive Income is. It is one of the elements you should concentrate on to get on the move as soon as you can, as it may take some time to develop.

The other element you can start with is developing your Money Management Habit.

Even if you hardly have any money or income, you should still try to stick to the habit. It is not the amount that counts, but the system. Ever heard of the saying: “Where the attention goes, energy flows and result follows”

What helps is reading books like “The millionaire next door” and “A Four-hour Workweek”. People who have played the money game well, can provide you models you can copy. They continue to use these models even when they have plenty money already.

The system is fairly easy. You can start working with glass jars to get the hang of it. When you finished the peanut butter or jam, wash out the empty jars and you are on your way.

You need 6 jars and label them as follows:
1. FFA (Financial Freedom Account)
2. LTSS (Long Term Savings for Purpose of Spending)
3. EDU (Education of yourself)
4. NEC (Necessities)
5. PLAY (Play)
6. GIVE (Giving to others)

The idea is to divide your income, or pocket money if you want your kids to participate, over these 6 jars in the following percentages: FFA, LTSS, EDU and Play each 10%, NEC 55% and GIVE 5%.

When you understand the system you can use bank accounts or other means, but stick to the system and you will see your wealth grow. Multimillionaires keep using this system even when they have plenty! The percentages remain more or less in line with the lifestyle that follows availability of wealth;

Let’s discuss some of the “jars” to give some better understanding of the destination of the money.

I talk first about LTSS (Long Term Savings for Purpose of Spending) and NEC (Necessities) as these together make up the bulk of the amount.
When I say 55% of your income in NEC, I mean to say that you have 55% available to pay your truly daily necessities. So food, paying the electricity bills, mortgage, the bus fares, lunchbox contents etc.

For the big expenses like the car, studies of the children, renovation of the house, holidays, “contingency” and other major expenses you use the LTSS amount (10%). You can decide to divide the LTSS into sub-jars for different purposes. But the clue remains that this money is to be spend when needed.

Same goes for the amounts in the EDU, PLAY and GIVE jars. These amounts are to be spend as well. PLAY and GIVE at a monthly basis and EDU when an opportunity knocks at your door.

The only amount you will not touch anymore is the 10% you distribute to the FFA (Financial Freedom account). This money is to be dedicated only to generate passive income. The fruits of this account, interest, dividend, passive income from renting real estate etc. you can freely use and spend, but the principal amount should stay intact to keep on generating. With other words: “You can eat the Fruits, not the Roots”.

By the way, if you are a business owner, treat yourself and the business as different entities. Pay yourself a salary and use the system also privately. For the business you should add a 7th jar: TAXES.

I would like to explain one more “jar”: GIVE (Giving to others). Remember it is 5% of your income. Even when you have no income, make it happen. It can also be something you can make yourself or maybe you can give some time. The importance here is that you spend on “giving to others” on a monthly basis. Make other people smile and feel the positive energy it gives to others and yourself! It is priceless!

What kind of system do you use and how does it work? Tell us your success story and help others to become successful as well.

If you want to find out what more I have learned and will share with you, subscribe to the Blog posts and receive the next issues automatically.

Esther Celosse
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