These principles apply no matter how much money you make. I remember when a musician I admire, a very famous American legend who had made a ton of money, was in the news as the IRS was taking away his home and most of his possessions — why? Because whoever had done his financial management had not spent his money so he still had some. Sad but true.

But wait a minute. What if you only make a certain amount and your bills are higher? You may not make a six or seven figure income yet still the concept should be applied to you and everyone you know! Here are some of thebasics that anyone must apply financially.

You need to figure out your average expenses over the last four to six months. If you’re self-employed don’t forget your tax set-asides.

Next look at your income. It should be more than expenses, right? I’ll have you know that most people are spending more. If you are spending on an average more than you are making then ...you need to cutback on your spending, so that it is lower than your income.

If you have back-bills as well then you need to again cutback by 5 to 10% and use this percentage to pay-down the back bills.

We aren’t finished as yet because this is only covering the bills and you’ll die poor if you stop here.

Here is where things become really interesting or fun or energetic. This next point is the very key element that will make you much more stable and happier.

Now that you have the above worked out and you can pay everything and your back-bills are being paid as well we’ll add a mind twister. I want you to now take money off of the top of your income — a certain percentage and I want you to spend it into an emergency fund account. You want it gone and not easily accessible.

But wait. You may think that if you did the math above there isn’t any money to take off the top for this special fund, right? You are right, this is correct and this brings in how this works. If you really needed some money in an emergency you could probably come up with it, right? Most people can vouch this is true.

We take a percentage off the top, say 10%, or even more. We had a client that took 30% and we’ve heard of a financial planning expert taking 50% off the top. Of course if you are breaking even or worse and now we say take 10% to 50% off the top, you won’t have enough, that’s correct. But this “pressure” is what’s needed in order that you get more income coming in. You’ve got to demand it. Demand more income and then really bring this demand into reality.

Example: A wife works with her husband in their small business, she handles the finances. There is only ever enough income to be behind and they are forever playing catch-up. She implements the above principle into their business. She decided to take the money off the top and buy gold ounces as it is readily exchangeable in an emergency and yet not that easy to spend. A few weeks go by and she comes to see us. They are now handling there costs and bills better and things are moving right along except she has a problem. She has too much gold. She started buying these ounces and throwing them in the back of a file cabinet drawer and it had become too heavy. Fine problem, we fixed it. This is the same person who had said previously that if her husband found that there was money in savings he’d go right out, find a need and spend it. After beginning the new finance program, as far as he knew there was a higher demand for income from the wife who needed it to pay bills (spending the income) so he went right out and made more income and they were now spending money into the emergency fund account. The wife was happy and as a result so was her husband. Amazing the difference a little “money in the bank” will do for a relationship!

This same thing happened with the professional we first mentioned above. We took money off the top so he had to produce more, which he did and he forgot about going out and doing some other type of work. He continued doing the work he loved. Now that he increased his income and was spending money into his emergency fund account he was a transformed individual. And a very happy one at that.

When you increase your demand for more income it can take on many different forms. It may be that you organize your time better so that you are more efficient. You analyze what you are about to do so that you get the right things done and are thereby more effective. When you really truly do this step as an action, as well as a decision, you can gain tremendous results.

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