Let’s quickly review principles discussed in first part of building wealth. We established that prosperity consciousness must first be developed mentally to acquire any real wealth. A person that constantly worries about money most likely is living in scarcity consciousness regardless of size of his or her bank account. We talked about some methods and daily exercises that can be employed to start developing a stronger level of prosperity consciousness. The first exercise uses written affirmations, second utilizes visualization, and finally we need to become more aware of how willing we are to give and receive prosperity on a daily basis. If we start using these methods, we’ll begin to see gradual changes in our lives that will become larger over time.
As a follow-up to improving way we think about wealth and prosperity, there are some effective money management techniques that will further support our prosperity consciousness. Certainly if we use exercises discussed earlier in Part 1, we’ll start to view money differently, but those principles should be fortified by our actions as well. What we want to accomplish with our money is to generate a steady cash flow into our lives that will elevate our feelings of prosperity over time. The first step toward achieving this end is to simply pay ourselves first. Every time we get paid, we should save a portion of what we’ve earned. It’s recommended that at least 10% of our pay be set aside for savings.
So if you already have a savings account, big question is what is purpose of this account? Is it for emergencies or a major purchase? Do you have more than one savings account? If we want to establish a consistent flow of prosperity, we must gradually build prosperity in our bank accounts while at same time protecting ourselves against life’s financial emergencies and obligations. It’s very demoralizing to save a significant amount of money only to have to spend it on a costly emergency – worst part is that often times, an event like this will knock us right off prosperity track entirely. So we should strive to not only protect ourselves financially from these types of events, but more importantly, we must protect ourselves emotionally from these types of events.
The most effective way to handle our savings is to have more than one savings account with each having a different purpose. Although each of us will have different financial goals, it is recommended that everyone have a minimum of three different savings accounts with following purposes:
1) Emergency Funds – This fund is set aside for those incidents that pop-up unexpectedly. Managing these events is critical to building wealth because they throw us off our budgets and demoralize us mentally. Unfortunately, emergencies are when many of us resort to credit cards, which makes this account even more critical. We MUST manage this aspect of our financial lives, otherwise life’s little emergencies will continue to rob our wealth if we let them.
2) Purchases – This fund is used to save for major purchases such as a piece of furniture or a new car. In addition, we can also use these funds for buying Christmas or birthday gifts. These types of purchases are also occasions where many of us are inclined to use credit. It’s not uncommon for Americans to be loaded with debt right after Christmas holiday season. Just like Emergency Fund account, Purchases account is designed to keep us away from using credit.