– It’s time to talk about wealth pie. Wealth pie is a process, a system on how you divide up the dosh that comes into your life. Here’s the best get-rich quick secret. It doesn’t matter what you earn, it doesn’t matter how you earn it, it doesn’t even matter
necessarily how you spend it. What matters is what you do with it. How you manage your money,
how you allocate it, how you give it some guidance so that it can actually support you in your life is the most critical, critical wealth skill
that you need to learn and you know all of our
education teaches us how to go out there and earn more money, all of the advertisers and media tells us how we should spend it
but it’s the gap between is the most important element
that is gonna determine your relationship with money and whether money can support
and serve you or enslave you. So let’s dive into wealth pie. Wealth pie is a money management system which is all about
ensuring that you allocate different amounts of money
to your different life needs. The reality is your needs are diverse and so are your financial needs. And if you just have one big pile of money trying to cover all of those needs, it’s never going to be able to do that. Imagine having a sports
team and nobody’s got different roles to play. Everybody’s in the goals
or everybody’s a shooter or a kicker. You’re just going to be
like this three-year-old football match where
everybody’s chasing the ball and it goes nowhere. It might be fun to watch but
it’s not very successful. So just like in a sports team, everybody has different roles, different points and
objectives in the team, your money needs that as well. So there are six key players
say in your wealth pie. Or six key elements. And so with every bit of money
that comes into your life and yes, every bit of money, it’s really important
that you have a system of how to allocate and
divide that money up and that’s why we call it wealth pie ’cause it’s dividing that
money up into different slices. So when money comes into your life the very first and most
important allocation that needs to happen before anything else is you need to allocate at least, at least 10% of what comes
in to paying yourself first. In fact, to paying your freedom first. This is money that gets invested and if you don’t yet know the difference between investing versus
saving go and watch the blog that we’ve done on that. But this money is allocated
towards your financial freedom, to create assets, to invest, to build up these things
that can create your freedom. So, you can get a nice,
shiny pot and go okay, 10% of your money goes into
your pay yourself first. That is your freedom pot. Now, your next 10% that comes in, what should we put that into? Yes, I like these pots with lids Because you want to protect
yourself from your money. Especially your investing pot. You don’t pilfer from it. And the next 10% goes into
your save to spend spot. Again, a really big difference
between investing and saving. And so your save to spend
is the next 10% allocation and then you’re building
up your emergency fund, your cash safety net with the intention of spending money later. Again, there’s a different
blog on understanding emergency fund and your cash safety net but this is the pot where
you are putting money aside with the intention to spend it later. Super important that you do that. Save to spend, it’s your
next slice of that pie. Now the third slice comes in,
is a real interesting one. So there’s the green for growth and this is about your personal expansion. It’s really important to understand and now having worked with
thousand, thousand people I know this to be true
in my own life and theirs that our wealth can only grow in direct proportion to our
ability to bring the money in, to manage that money and to grow it. So our capacity with how we handle money, our ability to invest it,
our ability to you know, learn what to do with
it and create assets, is going to have a direct impact on how much of that money you get to keep and how your wealth grows and
so you need to be allocating some money in your life to ensure that you are growing. You’re growing in your
knowledge, your skills. It’s that mentors you need in your life. Is there training programmes to attend? Is there some additional courses you want? To grow your capacity, your knowledge in both this area of
your financial wellbeing but also in maybe your chosen profession. Are you ensuring that
you also can increase your earning potential as well
as your investing potential? So super important that
you allocate some money to your own growth. Because if you’re not
growing, you’re dying. So there you go, 10% into your freedom, 10% into your saving,
10% into your growing. Now the next 10% is super fun and that’s why we got the heart pot for it and this is your joy pot. You can call it your
fun pot, your play pot. The reality is, life is meant to be loved. It’s meant to be lived,
it’s meant to be joyful and of course there’s practicalities and things we need to
do and there’s things like brushing our teeth or
going to sleep that you know, might feel a bit boring. Maybe for you cooking food is that but at its core, life is
meant to be loved and lived and so you’ve gotta be conscious about are you directing some of the money that comes into your life to
consciously direct it to joy. Because also, here’s one of
the most fundamental laws of wealth and life. If you aren’t topped up, if
your batteries aren’t full, if you aren’t charged to be able to bring enthusiasm to your life, it’s
just gonna be so much harder to do the things you need to do. You know this is about how
do you bring your passion to your life rather than trying to expect your life to bring you that passion and the more that you’ve
allocated some time and money and energy to things that fill you up the more you’re going to able to do the other things that
you need to do in life. That are vital to this whole wellbeing. So your play pot is super
fun but it’s not necessarily an easy pot because it also means you’ve gotta get really clear
on what truly brings you joy. Not what media says you
should spend your money on. You know maybe for you going and having a massage just feels hideous but for somebody else it’s amazing. You know I go and get my nails done but oh my God it’s like
can I get that over as quickly as possible. I don’t find any joy in that. Give me a jigsaw puzzle,
I can lose myself forever. And it also doesn’t have
to be expensive things but really start taking note, what are the things that bring you joy? What lights you up and then this 10% of all the money you get,
this account, this pot, is to fund those things. Making, flying that kite but
it’s also really important that this is stuff that you do. So often people will then
go, oh and I’ll allocate that money to my family, my kids. No this is about bringing
your joy pot right up so that you can do the rest of your life. So there you go. We’ve already allocated 40% of your money. You think well Ann, you know
where do I pay for the food, the rent, utilities whatever. Well that is this next pot. This is your necessities. Don’t you love this pot. This is all about getting
the day to day stuff done, cooking the food, providing the house. You know, chopping the wood. This is necessities of life. And it’s really important that you get your necessity, the cost
of your day to day life down to no more than 55%
of the money that comes in. So if you earn 100,
only 55 should be going to the day to day costs. Now you might be going okay Ann, let’s switch off this
video right now, I get it. For most people that’s not the case. For many people they
completely break even. Everything that comes out
gets consumed in their life because we’ve got this unconscious rule that we’ve been told
that we’ve gotta get rid of everything that we, that comes in. And also part of the rule is oh well, we’re meant to constantly
upgrade our lifestyle to match what comes in. But as long as you do that,
you’re just in what’s called a break even money flow. And that is a real, real problem because you’re never actually going to be able to create wealth. By getting assets, savings,
these other things in your life. For many people, the
necessities maybe cost them 120, 140% of their lifestyle. They’re constantly having
to go into debt or overdraft to pay for things. That is a real challenge. Now there’s a fantastic
book that I absolutely love. It’s called, “The Millionaire Next Door” by two authors, Stanley and Danko, those are their surnames and
it’s a book wow you know, maybe 15, 20 years old
where they went and studied people who were millionaires
in their lifetime. They didn’t inherit it,
they actually created it. And they found one of
the consistent habits and principles of people who
were independently wealthy is that they consistently spent, their lifestyle,
consistently cost them less than what they brought in. And so we’ve got up to 95%
allocation of the money that comes in. We’ve got paying your
freedom first, save to spend, making sure you can
grow and expand yourself and your capacity and your ability to manage and handle
money and bring it in. Joy, making sure you
have fun in your life. Necessities, making sure
that you bring your cost of your lifestyle down
so that you can really allocate it to other areas
and what’s really key in terms of this is also ensuring you get the value from
everything you have. So if you haven’t checked
out Squeeze the Juice yet go and do that because there’s
always rats in the pantry, a way to bring that down. And the final 5%, that is contribution. You know this is so important. There’s, it really sends such a message to our unconscious when
we’re able to contribute time, money, energy to others. Is that it tells us that
there’s more than enough. There always is enough
and it starts breaking this unconscious fear that so many people are you know, controlled
by, that there’s not enough or there might not be enough and we can hoard and hold
on and that’s so destructive to our wellbeing but also to our wealth and so I allocate 5% to contribution. Now if you want to increase
that to tithing in some form, to 10%, if that’s part of
your, you know practise. Then that other 5% needs to come from your necessities,
not from these other pots. Yep, you’re gonna have to reduce your necessities down even more. Now here’s one caveat. If you are blitzing your debt, if you’ve got any form of consumer debt, your credit cards, overdrafts, loans, that you need to be getting rid of, you’re gonna take that 5% contribution and you’re gonna take
5% from your savings pot and that 10% is going to be
for your debt blitzing fuel. Now we cover your debt blitzing snowball in another vlog but a lot of people say but Ann where does my
additional debt just you know, down payment happen. So firstly, your repayments,
on your minimum repayments and your standard debt
repayment must come out of your necessities, yes it must and then your additional
money that you throw towards your debt destruction comes
out of your contribution and 5% from your saving. Not from your assets, not from your play, not from your growth because
you need all of those to keep expanding your wealth because the greatest gift
you can give the world in terms of contribution is you
being financially liberated. You being free of consumer
debt and that’s why you need to put your
own oxygen mask on first as they tell us in the aeroplane
before you can help others. And remember you can
contribute in other ways, your time, your energy,
share with somebody else how to manage their money. There’s no better way
to learn than to teach. So there you have it. Managing your money, the best
get-rich quick scheme there is in the world. Being great with giving
your money direction. So instead of enslaving you it can support and serve you. So wherever you’re watching
this I would love you to tell me in the comments below which of these pots do you
already have in your life and which ones don’t? Are you good at the play
pot or maybe you are like, oh no that’s the first thing that goes. Are you growing, are you investing? And how scary does it feel
to get your necessities down to 55% or maybe you’re there already. So yeah in the comments just let me know what is your current
money management look like and how does it feel to get a
system and process in place? So I’m Ann Wilson and just
keep taking step by step towards your freedom
because that’s all it takes. Bye for now.