Tuesday, May 19, 2009

Step 8 to Abundance: Understanding the Flow of Money

Okay, you've been working on your eulogy. You've got a vision for "why" you are saving money and digging yourself out of debt at the same time. You have purpose. And lastly, you have started tracking your expenses. Now, comes the time to pull all this together. Time for you to put the Flow of Money into perspective.
One reason money may have not been working well for you is due to your ignorance of how it works or "flows" in and out of your life. Don't worry, this is NOT something they teach in any school. As important as the Law of Attraction and the Flow of Money are these principles are so basic, most folks don't give them any thought until their money issues reach up and bite them!
Money is not linear. It does not flow like a stream from the mountains to the plains in a fairly downhill line. It is circular. Money moves in a HUGE circle. So large, in fact, that most of us don't comprehend the size of the circle until we are actively engaged in making the circle move faster for us.
Here is how it works: the flow of money is split into three large sections that move around our lives in a curved path.

  1. The Living Arm of money is the path most of us know about intimately. It is where all the expenses are located and it usually takes up 110% of our income. Yep, we spend beyond our means in this category.

  2. The Saving Arm of money is the least known path for Americans. We really stink at saving money. The Chinese and Japanese so have us beat in this area! Of the entire US Population, only 2% saves money. Yikes!

  3. The Giving Arm of money is actually well done by Americans. We are a very giving country, but the reason we don't benefit like we could by this movement of money is due to our inconsistency of giving. We donate here, there and everywhere, but in a very sporadic way. This does not help keep the flow of money going. Consistency is the key here.

To get money moving in your life you need to have cash flowing to all three arms of money at the same time. That is why it is impossible to pay off your debt first and THEN save money. You must save money and pay off your debt at the SAME time.

Now that you know how money flows, you'll be able to use that knowledge to funnel cash into the areas of your life that will bring a return. The next post will deal with the actual mechanics (read: details) of how to make that happen. Step 9 to Abundance is the 60/40 Principle!

Stay tuned!

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