No matter where you're at right now with Internet Marketing, being good with money is a core life skill you need it you're going to have the vast wealth and freedom you desire.
Here are some basic money tips that will help you actually reach your financial freedom.
Make the right choice about your bank accounts
Money and banking are a part of your everyday life. As a starting point you need an account you can make deposits into, withdraw cash from and use to pay bills and your tax obligations.
This is where a transaction account comes in. A transaction account allows you to physically deposit and withdraw money (from a bank branch or banking service provider). The down side is that it doesn't reward you very well if you leave money sitting around in the account. In fact chances are the interest rate used to calculate your banks reward to you for them having access to your money for their purposes will be incredibly low.
To profit from all your hard work and the money you earn, you'll also need a savings account.
A savings account will pay you a higher rate of interest than a transaction account on any money you leave sitting in your account as long as you understand the rules "the terms" of the account and how interest is calculated for your account.
As an Internet Marketer, you'll prefer some form of online savings account that is linked to your transaction account, so that you can set up automated transfers and systemise your money management.
Online savings accounts can only be accessed and managed via Internet or phone banking and are fee free. Watch out, though, for fees on your transaction account when you move money between your accounts.
As an alternative to the transaction and savings account combination, you may already be pretty profitable through your Internet Marketing and have a sizeable pot of money. In this case you'd get a Cash Management account which has a tiered interest rate that's applied to the balance of your account. The more money you have sitting in your account the higher the interest rate used to calculate your reward for being good with money.
Have a savings strategy
If you want to increase your personal wealth faster you need to look at what's coming in (income) and what's going out (expenses).
For most of us our main expenses are -
- Online Advertising
- Web services (such as hosting & autoresponders)
- Subscriptions (such as Stompernet, Tracking202 & Market Samurai)
Fortunately there are plenty of automated online services that keep track of the amounts owed and in some cases the people we owe automatically grab their cut before the money gets to you; like your affiliates, web service providers, subscription services and some online advertising agencies.
For everything else it's up to you to keep on top of it.
With some many bits of money moving in and out of accounts it can be pretty challenging to keep on top of, and you may be tempted to get someone else to deal with it all. Unfortunately, handing it all over to someone else is exactly how you get yourself into financial bother.
Handing over the book-keeping and paperwork side of things is definitely something you should consider once you have some Good Money Habits in place.
As Warren Buffet says "Make your own investment decisions". If you let other people decide what to do with your money, before too long your money will be their money.
So start with Good Money Habits as a way of preserving and growing your money. When you've systemised it so that your money is managed the way you want you can get others to run it for you, until then it's up to you to check your spending and look after your bills and income.
Establish Good Money Habits
Good Money Habits are the things you do to manage the money you make so that it grows into the large sums you need for your dream lifestyle and the things you want.
Pay Yourself First
Work out exactly how much money you need each (week, fortnight or month) to cover your living expenses (exactly as they are now) and pay this to yourself.
Now pay yourself a savings amount (aim for a minimum of 10% of your living/lifestyle costs) that goes directly into your online savings account. When you're just starting you may feel you're unable to manage 10%, so pay an amount you are comfortable with, even if it's just $1 - Your rule is, it can never be $0.
Cover your Financial Obligations
In a savings bucket/online savings account transfer the amount of money you owe in tax for the period (week, fortnight or month). Due to variations in tax calculation and rounding it's always good to add an extra 1% to the tax rate you use for working out how much to put aside so you always have enough money to pay the 'tax man' when the time comes.
Have a savings bucket/online savings account for your other expenses and set aside wither the actual amount for up coming bills if you know the amount, or a percentage. The percentage you allocate will depend entirely on your set-up of incoming & out-going income and risk aversion, it can be anywhere between 21% and 83% of your overall income. By regularly setting aside money to pay your bills any anxiety you may experience when you receive bills now will vanish.
Save the Lump Sums
Put your affiliate bonuses, tax refunds, financial rewards & gifts straight into savings. If it's a big enough lump sum, consider sticking it into a Term Deposit or purchasing Bonds.
When you think of it in terms of spending the interest your lump sum earns you and will continue to earn you well into the future, delaying rewarding yourself for a few months feels a lot less like a punishment and more like a tantalising opportunity to fantasize about what you'll get yourself. Especially, when your lumps sums have accumulated enough interest earning capacity that the interest pays your entire lease payment on something really cool.
Save in Buckets
When you have one big pot of money you're saving grows incredibly quickly and soon you forget how much effort has gone into accumulating that money. That's when temptation really kicks in and the urge to just spend it all can be unbearably overwhelming.
Rather than fight this urge which will make you feel like you're denying yourself, split your saving up into separate buckets.
You have in your head a whole vision of everything you want to achieve, own and do - whether it's a dream house, to travel and explore the world, to own special things, do amazing things or just to have that freedom.
So create a savings bucket for each of the things you desire and put money into all your buckets regularly. That way when you reach your financial target in one bucket and can fulfill that desire, you'll be doing it without compromising on your other dreams and desires when you do it.
Have an Emergency Bucket
Keep a handy lump sum in a savings bucket for those unexpected expenses that appear from nowhere. A good rule of thumb is to have the equivalent of 3 months worth of your living expenses in reserve for emergencies.
The Good Money Habits all have one fundamental thing in common - they take away the emotion of handling & managing money so that compound interest can take over and exponentially grow more money for you.
Spending Your Money
With all this saving of money it may seem like there's no money left for you to have fun with.
In the early stages you may feel like you're denying yourself as you adjust your thinking from 'Consumer' to 'Entrepreneur'.
Interestingly, from these feelings of denial you'll find motivation and inspiration to create even more income. You'll start to look for other opportunities to product additional income streams.
As you increase your income you are able to increase the amounts you allocate for your Good Money Habits so that when you're paid yourself first there is more for your lifestyle, more for your savings and more for all your savings buckets.
This is how you acquire your fun money; through the increased allocation to your living expenses.
When you have the courage to change and use Good Money Habits, you're able to ride out the times when Google Slaps you, launches flop or things take longer than expected to return income, because you're operating from a position of financial confidence.
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