You have likely heard that 70% of all lottery winners go broke within just a few years of winning a huge payout! When there is a record-breaking jackpot, millions of people stand in line to buy a ticket for the chance to be a lucky winner.
Surely every ticket holder imagines that their fate would be different, their story would not be a sad tale…
While the lottery is the most extreme example of wealth squandered, we see it in smaller ways all the time–an inheritance, a bonus, an unexpected tax return.
If you have ever looked back and wondered how you could have spent money foolishly–you aren’t alone!Â
Managing money is a skillset that you develop, and if you don’t ever take the time or energy to develop it, you can’t rely on it to help you deal with extra money or if you have a big expense coming up.Â
You can start developing your “Money Skills” today.Â
To begin, let’s pick something that will stabilize your finances and only takes a few months to see the fruits of your labor. Â
Let’s start with a Sinking fund!Â
If you aren’t familiar, this is a special fund you set up to begin saving money each month towards an expense that you know is coming in the future. This way, you can pay for it in small chunks, rather than one whopping payment!Â
Think about it–when you plan well for your Christmas budget, you are excited to buy gifts, rather than fearful that you won’t have enough. Or if you are saving for your next car or car repair, you don’t feel flustered if your car doesn’t start. You have planned for it, and you are ready.
I have said it before, and I will say it again…Sinking Funds Make You Feel Powerful!
So if you want to start developing your money skills, start a sinking fund. Here are some tips to help get you started:
- Find a Place to Park Your Money
Decide where you can put this money so that you won’t spend it! Some clients still use cash in envelopes, while others have a separate bank account. - Pick an Amount that Works for Your Current Budget:
The goal here is for you to become successful by saving a bit each month. Don’t become so ambitious with your goal that you can’t stick to it. It is better to start small and keep your promise to yourself than to set aside a big chunk of money that you end up taking from later when funds get low. - Make the Savings Automatic
Don’t give yourself the option to hold back on your Sinking Fund. When you make it automatic, it is harder for you to change your mind. - Determine What Qualifies for Withdrawal
Decide when you will withdraw the funds so that you can keep it robust and growing, rather than tapping into it when you need a few bucks. You could even write this down for the future so that you can keep yourself “honest” in the future.
Many people get wrapped up in an identity of not being good with money, but you just have to break it down into skills you acquire and practice. If you practice good money management techniques over time, you will become better and better with money.Â
So let’s stop looking at the past, and start building a strong, bright future.
