Your Money: Our Two Cents
by Kevin Urban
If you haven't figured it out by now, we are a huge fan of systems. And with the economy the way it is, having a financial plan and financial system is an important part of everyone's life. Having the right plan in place will help you make sound financial decisions to get you through the lean times and give you hope financially - while not going broke or getting in debt. At The Savvy Actor, we don't believe in the starving artist mentality. We believe that you can have your art, set your standard of living high, and ride through tough economic times with ease because your system is supporting you. Our system starts by paying ourselves first.
But before you pay yourself first, we all need to figure out our monthly expenses and know where we stand financially. What do you pay for rent, utilities, groceries, entertainment, transportation, laundry, etc. Figure out what you need to live on without all the extras like Starbucks Latte's, dinners out, drinks with friends, new clothes, etc. How much money do you need to make ends meet a month? Then divide that by 4 (weeks in a typical month). This is what you need to put aside each week to cover your Necessities.
In his book, Secrets of The Millioniare Mind, T. Harv Eker talks about taking the emotion out of money, just like we talk about taking the emotion out of your business. In order to do this, he suggests creating six separate bank accounts. For each account you attach a percentage of your weekly income which can be adjusted as needed. Let's explain each account….
Financial Freedom Account (FFA) - 10%
The financial freedom account is where we pay ourselves first. It is our savings account for retirement and something we will continue to grow by letting compound interest work its magic. It is the money that goes towards mutual funds, stocks, bonds and the various other investments that exist.
Necessities Account - 50%
This is the account where we pay for life's necessities. It includes rent, utilities, cell phone, groceries, etc. The percentage used on this account will need to fulfill your monthly expenses. It receives the largest percentage of your income.
Education Account - 15%
The education account is actually your acting account. It is for acting classes, voice lessons, headshots, career coaching, etc. This will probably be the second biggest percentage, because we do need to invest money in our careers. This can account can also be for educational seminars, cooking classes, really anything you want to educate yourself on.
Play Account - 10%
Your Play account percentage is equal to the Financial Freedom account percentage. It is the money that we will use to buy a round of drinks for everyone, or a nice pair of shoes, or that new iPod. We need to indulge our inner child or else it will rebel! The thing I love about this account is that it MUST BE SPENT each month.
Long Term Savings for Spending (LTSS) - 10%
This is the money you'll use to save for the trip to Europe, an engagement ring, a house, a car, etc. That's why you would pay for it with your Long Term Savings Account. Within the Long Term Savings account you can breakdown the percentage of your contribution to cover several different Big Ticket savings projects, and sya have two accounts where you contribute 5% to each.
Give Account - 5%
This account is there because it is so important to give back to our community and to causes we believe in. Giving is our way of giving back and being thankful. Its giving twenty dollars to AEA Fights Aids, or the politician or church of your choice or $100 to a friend for their one man show. At 5% you can donate to your favorite cause and not feel guilty about giving money away….because you budgeted for it.
Some of us might also have a Tax Account. If you file a 1099 form you will also need to set aside 28% for the tax man before you make your percentage breakdowns. I suggest another account for that money that you don't touch until you have paid your taxes for last year. That way you can earn interest on your money and not freak out when you owe money at the end of the year.
By having a plan, and trusting in that plan you'll begin releasing the anxiety that the current economic climate can create. This plan is there to help you figure out your finances and help you sleep easier.
We urge you to read Secrets of the Millionaire Mind by T. Harv Eker for more information, since he is the mastermind behind this brilliant system. Check out his Millionare Mind Intensive, a 3 Day Seminar in Secaucus, NJ October 17- October, 19, 2008. I'll be there...for the second time.
