Alex Shalman . comPractical Personal Development

As you progress on your journey of personal development, you are bound to explore the topic of finances and wonder just what is the best, easiest and most fun way to make money. Assuming that you already have some form of income you will need to figure out the most effective use of your money to maximize it’s value. Don’t wait until you have a million dollars until you learn how to manage your resources - learn while you have one dollar, it’s a much cheaper lesson.

Based on Robert Kiyosaki’s Rich Dad’s Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not! I have adopted the following schematic to which I allocate my income.

• 60% Expenses/assets/investments
• 10% Donation
• 10% Long-term savings
• 10% Short-term savings
• 10% Extravagant spending

What if it takes you 90% of your income to cover your expenses? For this we take a lesson from the late Benjamin Franklin. In his autobiography, Benjamin Franklin talks about frugality as one of the thirteen virtues that he was determined to perfect in his life. In my eyes he is the personal development super star of the 1700s, seeing how he went from nothing to super wealthy, very healthy, very studious… well you get the point. (I recommend reading The Autobiography of Benjamin Franklin to get some more info about him ).

I like the strategies offered for frugality by Wikipedia:

Some of the main strategies of frugality are the reduction of waste, changing costly habits, suppressing instant gratification by means of fiscal self-restraint, seeking efficiency, avoiding traps, defying expensive social norms, embracing free (as in gratis) options, using barter, and staying well-informed about local circumstances and both market and product/service realities.

Using the methods outlined above I think that it is possible to allocate 60% of your income into expenses, assets and investments. Make a list of ways that you could be frugal and put away money for bigger goals. I’ll start you off:

• Take public transportation instead of owning a car.
• Live in a smaller place (if you are renting).
• Own less expensive clothes.
• Eliminate eating out.

Extravagant spending

What is it and why do you need it? Extravagant spending would be anything extra and over the top such as going to a restaurant and spending a ridiculous amount or giving yourself a weekend at an all inclusive spa.

A good reason to have a separate category for this section is to eliminate guilt of not using the money more effectively. If it is in your budget, than you can consider it already spent. While you’re getting the service that your money has bought you, you can just concentrate on receiving full pleasure. By having these splurges, you will have a better idea of what a luxurious life style is and strive harder to achieve the means to be able to enjoy such things more regularly.

I earned this money, why give it away?

Some people frown upon donating because they believe that they earned their money and others should do so themselves. However, they fail to realize that some people truly do not have the same opportunities or need some immediate emergency care that can only come from the compassion and sacrifice of another human being.

Another reason to donate is that you really gain an appreciation for what money you already possess. You actually have enough money to give some away and still have enough for yourself! This comes from proper budgeting.

While money does not have to be the only thing you can donate (old car, old clothes, your time) we’ll leave it here for the sake of this article.

Savings: long-term vs short-term

Short term savings could be for things like a new car, a new gadget, a vacation, furniture, etc. Depending on your income and how expensive the item is, you’ll know if it goes into this category.

Long term savings includes things like your retirement fund or your child’s education fund. You could always opt to invest this money and play around with it, but if some things aren’t worth the risk, than a secure investment would play out nicely.

Just remember to have money work for you and don’t revolve your whole life around working for money. This could best be accomplished through investment and entrepreneurship .