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Thomas Jefferson said to never spend it before you’ve earned it.

Robert Kiyosaki said it’s not how much you make, but how much you keep.

Janene Murphy said some people make enough, some people don’t, and it has nothing to do with their paycheck.

What are these successful people talking about?

Managing money.

And if you want to win financially – you have to do what successful people do. So what better way to manage your money than like a CEO?

 

Today, I want to teach you 6 rules of money that’ll transform your life.

You are the CEO of your personal finances. And these are the financial principles you should follow.

Step 1: Make a budget

man budgeting

Successful businesses use their financial statements to make decisions. Successful households do the same.

Think about it.

Have you ever looked at your credit card bill and thought:

Wait, how much did I spend? What on EARTH did I get?

 

We’ve all been there. But let me say this straight:

You have to make a budget if you want to be financially successful. Creating a budget is the only way this plan will work.

Can you imagine a successful company like Apple running their company without financial statements? Making decisions based on what they think is in their bank account?

Small businesses make this mistake all the time. And they go bankrupt.

Families make this mistake too. And they rack up tens of thousands of dollars worth of debt and lack financial discipline. 

Budget Sheet


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But here’s the good news:

It’s never too late to get your finances in order. And nothing feels better than having a plan for success. So let’s take stock of where you are today.

Before you create your budget, there are 3 things you’ll want to write down:

1. How much money is in your savings account
2. How much money is in your checking account
3. How much debt you have (everything except your mortgage)

If you can make it past this step, then you’ll have a much higher chance of winning with money.

After you’ve got those 3 numbers, then you’ll create a zero-based budget.

 

The idea is simple:

Zero-based budgets give every dollar a job. Have $250 leftover after budgeting your expenses? Great! But you aren’t done budgeting yet.

That $250 needs to be assigned a category. Savings, debt, fun money – wherever.

This technique is one of the most powerful rules of money for ensuring you don’t waste it.

Here’s an example of a zero-based budget:

example of a zero based budget 

See how easy that is?

No more wondering what to do with your leftover money. Give your money a purpose and make it work for you.

People who use zero-based budgets pay off 19% more debt and save 18% more money. Aren’t those odds you’d like to put in your favor?

 

Step 2: Trim the fat

money planted in the ground

As a CEO, how closely would you watch your expenses?

You’d cut anything that wasn’t necessary.

  • Unused subscription services? Check.
  • Old gym memberships? Check.
  • Excessive dining out? Check.

Set yourself up for financial success. Decide how much you’d like to save each month then work backwards to making it happen.

So for example, if you tell yourself, “I’d like to save $500 each month” then you’d ask yourself:

What expenses can I get rid of that will bring me that much closer to that goal?

 

But here’s the deal:

You’ve got to give yourself a little “fun money.” A budget without fun factored into it is a budget that isn’t realistic. And in order to run your money like a CEO, your plan has to be realistic.

So set aside 5-10% of your take-home pay towards recreational spending. Use it however you like. Just don’t go over budget.

After you’ve done that, you’ll want to start saving while you spend.

Do you have time to clip coupons every week?

Most of us don’t, so don’t worry. My suggestion is to use a cashback app called Rakuten to save money on everything you buy.

All you do is sign up for a free account and shop like you normally would. Then you use the search bar at the top to search for your retailer.

Here’s how that looks:

rakuten homepage

Rakuten works with over 2,500 stores like Amazon, BestBuy, Walmart, and Macy’s. 

If you’re going to spend money on things you’d normally buy anyway, then you might as well save money doing it, right? This is one of the easiest rules of money management. 

Note: Our Rakuten link gives you a $10 bonus for signing up

 

Step 3. Protect yourself

woman using laptop

Let’s face it.

How many times have you had an unexpected expense pop up that left you wondering how you’d cover the cost?

Businesses know that feeling, too. 

According to the U.S. Bureau of Labor Statistics, 50% of businesses close within 5 years. Of those businesses that fail, 82% say it was because of cash flow issues.

But think about this:

Smart CEOs know that it’s not a matter of if emergencies happen, but when. Having an emergency fund is not optional. This is the key when it comes to understanding money.

 

In business, the term used to describe an emergency fund is “retained earnings.” Retained earnings are cash that’s tucked away to allow the business to operate when money gets tight.

In your household, your “retained earnings” can go by many names:

Emergency fund, safety net, or the Oh-crap-I-didn’t-plan-for-this fund.

If you don’t have an emergency fund, then you’re forced to take a loan or borrow the money from someone else. Both of those options put you deeper in debt. So if you want to follow these rules of money management then you have to stop that cycle. 

 

Here’s what you do:

If you have debt, you’ll want to start with a starter emergency fund of $1,000. 

If you’re currently debt-free (everything except your mortgage), then start building a 6-month emergency fund to cover 6 months worth of household expenses.

Step 4. Get out of debt

woman holding post it note that says make it happen

I don’t know about you.

But I thought it was a shame that Toys R Us went out of business. They were absolutely crushed by over 7 billion dollars worth of debt.

But it reminded me of one thing:

Debt crushes businesses just like it crushes people. I know fancy business people like to throw around the idea of using debt as “leverage.”

But here’s the deal:

Cash is king. And if you want to run your personal finances like a CEO, then you have to clear your debt.

 

And I was talking to a friend the other day who recently became debt-free and I asked her:

Is there anything you would’ve done differently during your debt-payoff journey?

She said, “I would’ve picked a debt payoff plan from the beginning. I realized that throwing money at my debt without a plan wasn’t the fastest way to get rid of it.”

So there are 2 popular debt payoff methods:

1. The Debt Snowball
2. The Debt Avalanche

The debt snowball requires you to list your debts from the smallest balance to largest balance. Then, you pay as much money as you can towards the smallest debt while making minimum payments on everything else.

 

Once the smallest debt is paid off, then you take what you were paying on it and add it to the next smallest debt.

The debt avalanche, on the other hand, focuses on interest rates. You list your debts from largest interest rate to smallest interest rate. You throw as much money as you can towards the highest interest rate while making minimum payments on everything else.

If you need help deciding which one is right for you, then read our debt snowball vs. debt avalanche guide.

Whatever method you pick, it will show that you’re committed to becoming debt-free.

Commitment is key when it comes to following these rules of money management. I know you can do it.

 

Step 5. Create streams of income

woman typing on laptop

Did you know that we’re in the year of the side hustle?

Whether it’s on the weekends or before their kids wake up for the day, over 44 million Americans are using their side hustle to get ahead.

And all successful CEOs will tell you that they strive to create multiple streams of income.

Because let’s be honest. Shit happens. And boy does it.

 

Economies take a nosedive. People lose jobs. Medical emergencies happen. So in the event that one of your income streams dries up, you’ll still have other sources of income.

Do you like hearing about other people who have side hustled their way to financial freedom?

I do too. So meet John Kapetaneas. 

John is a journalist who paid off $111,000 of debt in 2 years. He said his success came down to “embracing the suck.”

For him, that meant doubling down and taking on as many freelance projects as he could. It wasn’t fun, but boy did it pay off.

“I capitalized, over the course of two years, on every opportunity I could possibly find to work,” John said.

“That meant overnight shifts, holidays, weekends — every possible shift that I could pick up as a freelancer, I took.”

And if there’s one thing struggling financially will teach you, it’s how to hustle. And that’s why it’s one of the key rules of money management. 

 

Freelance work, plasma donations, cleaning houses, working online, and selling things you don’t need – show you that earning extra money is sometimes about thinking outside of the box.

The best part?

There are plenty of side hustles that don’t even require you to leave your house. Working from home has never been more possible. 

>>> Related: How I Made $5,500 From Home Last Month

Step 6. Think BIG picture

man using cellphone

Can you imagine what would happen if a CEO only focused on day-to-day activities and never thought long-term?

Do you think that business would grow, evolve, and prosper financially?

Definitely not.

So if successful companies have written goals and plans to achieve them, then so should you.

 

Because the research behind goal setting sends a clear message:

People who set goals are more successful. Every time and in every way.

As Bill Copeland once said, “The trouble with not having a goal is that you can spend your life running up and down the field and never score.”

Do you know what you’re running towards?

If you want to change your life, I recommend reading the 12-week year. I’ve read plenty of books on goal setting but that book covers the topic better than I ever thought anyone could. 

 

Here are a few of my own tips for creating powerful goals:

1. Be specific

Instead of saying, “I want to save more money this year,” you should say “I want to save $6,000 by December 31st.”
Clearly define your goals and watch them come alive.

2. Write them down

If you’ve ever read Write it Down, Make it Happen then you know about the powerful benefits of writing things down. So put pen to paper and get busy. This is more than just following rules of money management. This is about changing your life.

3. Create a plan

Raise your hand if you’ve ever set a goal and failed to follow through…

It’s okay. I have too. 

But here’s the thing:

Your goal is the finish line, but your plan is your road map. So create a plan for achieving what you want in life. 

For example:

Goal: I want to save $6,000 by December 31st.

Plan:

  • Budget every month
  • Cancel 3-5 unnecessary expenses
  • Earn at least $500/mo from my side hustle
  • Pack my lunch during the week instead of eating out

You see?

 

Recapping how to manage your money like a CEO:

blank notepad on table

1. Budget your money

Write down your debt and savings and checking account balances. From there, create your zero-based budget.

2. Trim the fat

Look at your bank statements over the last 4 weeks. If you could get rid of 3-6 expenses, what would they be?

 

3. Build your emergency fund

If you’re debt-free (everything except your mortgage) then build a 6-month emergency fund.

If you still have debt, then build a $1,000 emergency fund as your barrier against new debt. After that, you should focus on becoming debt-free.

4. Pick a debt payoff plan

Your plan only works if you do. Pick between the debt snowball or the debt avalanche and stay focused.

5. Create several streams of income

Did you know the average millionaire has 7 streams of income? And over 44 million Americans are side hustlin’ their way to financial freedom.

What’s your side hustle?

6. Have goals

Your goals and the plans to achieve them is your road map towards financial success. 

 

Tools of the Trade

woman writing in notebook

When you’re serious about following these simple rules of money management, it helps to have a few tools under your belt.

Here are a few we recommend:

1. Free financial worksheets

Our free financial worksheets are a great way to kickstart your budget and debt-free journey. 

If you’ve ever wanted to manage your money but didn’t know where to start, these PDFs are for you.

free financial worksheets


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2. Easy Money Toolkit

Maybe you want something other than a pen and paper budget. Or maybe you just want to have your personal finances at the tip of your fingers. 

Whatever the case, the Easy Money Toolkit is the perfect system for this. You’ll go from saving no money (ever) to paying off debt and saving your first $10k. You can read more about the toolkit here.

budgeting spreadsheet for virtual assistants
(Above: The Budgeting Template from our Easy Money Toolkit)

savings tracker for virtual assistants
(Above: The Savings Tracker from our Easy Money Toolkit)

3. How to Manage Your Money When You Don’t Have Any

personal finance book

This book is a best seller on Amazon for a reason. It’s an absolute gamechanger. If you want to solidify everything you’ve learned in this article and then some, you need this book.

As one reviewer said:

“So far I’ve read several books about personal finance and they seemed to focus more on getting rich, as if that’s everyone’s primary goal. Erik’s book spent a lot of time dealing with how to survive the day to day life of being in a bad financial situation, and I could really relate to that. Right now I need to get my finances in order and this book helped with that. I’ve already recommended it to some friends, and I certainly think it worth the time and money.”

I first read this book when I was in college and making next to nothing. This book taught me the rules of money management that will stick with me for life.

If you’re not making much money or you’re in debt, then this book is worth the read.

Are you looking for money management tips? These are perfect money management tips for beginners. These personal finances tips will teach you how to manage your money and create a financial plan. It also includes money management printables free. These money hacks will teach you everything you need to know. #moneyhacks #moneytips #moneymanagment

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