Managing Money: Five Basic, Hard Steps to Financial Freedom


What do you feel when you think about money? For some, we experience deep fear about the topic. For others, it brings joy and happiness to mind.

Regardless of how you feel about it, money is one of the most important mountains in our lives. Here’s what I believe about money: It’s a beautiful thing if used the right way. It’s necessary to enable us to live to our fullest potential. It’s not a bad thing or something to be avoided.

However, many of us still believe that money is a terrible thing, that poverty is somehow righteous. We often sabotage ourselves to keep us in this vicious cycle of poverty. And some of us believe that money will solve all our problems or make us better people. But money only magnifies who we already are, for better or worse.

Here’s what I see with the majority of my generation when it comes to managing money: Whatever comes in, goes out right away. We can’t control our impulses, and living paycheck to paycheck is as normal as the air we breathe. We go to Chipotle 3 times a week, buy a $5 coffee almost every day, and go on spendy road trips 4 times a year. And then we complain about not having enough money, wondering where it disappeared to. How did it go so fast, we ask ourselves.

But it’s not rocket science.

This is a case of simple math. If we can't manage $1,000 a month, we will never be able to manage a million dollars. This is harsh, but it's reality.

Because creating wealth is never about us! The reason we seek it is so we can do more. Help more people, reach more lives, solve more problems, and create more change in the world. These things are usually harder to do if we don't have money, or have very little of it. And if we can't steward the little that we have now, we won't be given more to manage.

First, A Warning

We’ve all heard these things that I’m about to talk about. Everyone knows that they don’t need another pair of shoes. We can all agree that a lack of discipline is costing us lots of money.

But at some point, we have to decide to change. When enough is enough. When we won’t tolerate the lifestyle of waste and poverty any longer. You have to make the decision. You, and only you, are responsible for that decision. And there is so much hope for you here.

Make the decision to change.

With that said, below are five basic, hard steps to managing your money well.

1. Change your mindset

It’s this simple, and this complex. It all comes down to what we believe about money. There are two mindsets when it comes to this: the Poverty mindset, and the Abundance (or Wealth) mindset. Because we become what we believe, if we can change how we think money, we’ll change how we use it.

Poverty believes that there’s only so much to go around. Abundance knows that there is always more than enough.

Poverty hoards whatever money that it has. Abundance gives with a generous heart, knowing that generosity always comes back to you.

Poverty wastes its resources on “stuff”, believing that happiness comes from having more things. Abundance uses its resources wisely, only buying the things it needs.

Poverty lives above its means, buying things for the sake of impressing people and looking cool. Abundance lives beneath its means, living on less than it actually needs.

Poverty will go in debt to buy something they “want.” Abundance avoids debt like the devil.

Poverty has no plan for its money. Abundance is extremely intentional about where it spends its resources.

2. Give, save, spend

I once heard a quote that I will never forget: "Until we learn to love saving money more than we love spending it, we will never get out of the cycle of poverty." 

It's been said that poor people first spend what they need, and then save what’s left over. But wealthy people save first, then spend what’s left over. We need to start managing our money by giving first, saving second, and spending the last. And it needs to be in this order if we want to do this well. 

Here’s how to do this practically: When you get your paycheck, put your giving money aside first. I believe in the tithe, that we should give 10% of our earnings to the church. It's a very basic, but I believe very important, aspect to wealth-building. 

After you put aside that giving money, transfer your savings money to your savings account. That amount can be a percentage of your paycheck, or a set amount that you decide to put away every pay period. And then, what you have left is what you use for rent, gas, food, recreation, clothes, and so forth.

Here's a little note on giving. Giving isn't a math issue, it's a heart issue. Money always magnifies who you are as a person. Give a little until you can give a lot. Because if you can't give 10% when you're making $20,000, you'll NEVER give 10% when you're making $2,000,000.

3. Treat debt as evil

What is debt? Debt = When you owe anyone for anything.

Debt is evil. Debt is a slave master, and the debtor its’ slave. There’s no way around that. Debt is evil.

Debt is keeping you back from reaching your fullest potential. It’s killing your dreams. It’s a death sentence to you doing what you were born to do. Get rid of it, as fast as you can. Start with your smallest debts first, then once you have those paid off, attack your larger debts.

4. Have a simple plan

You must know where your money is going. You must. Does this mean you need a fancy budget? No. But you must know where every dollar is going, before you spend it.

This doesn't have to be complicated. You can even do it with pen and paper. But for one month, keep track of all your expenses. Every dollar. Save your receipts, print off your bank statements, write it all down. Create categories for the different types of expenses, and add them all up at the end of the month. 

How much money did you spend on food, coffee, etc? It might surprise you with how much you're spending in some categories, or how little you're spending in others. Identify the problems where you are spending too much, and make a plan for how you are going to change your spending habits for the next month.

5. Make your own coffee

This sounds odd, but hear me out. A lot of us like to buy a $5 coffee before work or school. If we do that five days a week, that adds up to $1,300 a year! The little things are the big things. We also eat out way too much. How much is that costing you? Eating out regularly is one of the fastest ways to get yourself a nice spot in the food stamps line.

If we’re serious about doing something meaningful with our time, we have to stay disciplined and do the hard work. Make your own coffee instead. Cook your own food instead of going out every night. Ask Mom to give you some tips. Take a cooking class at your local college or on YouTube. Buy an inexpensive coffee maker.

Sure, it might not taste as good as what you can buy in the store, but the money will give you so much more freedom to do what’s important, and to do what you really need to do. Make your own coffee. It tastes like freedom.

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Practical Next Steps

Build a picture of what your spending looks like by creating a simple budget plan as described in point #4. Write out all your expenses for one month, review your spending habits, and then make a plan for where your dollars will go next month. Be the boss of your money from today on out.

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Life is short; don't forget to smile!