Money Makeover, Life Changer: 6 ‘Ls’ to Better Wealth

“Money is a tremendous force. The way you earn your money, accumulate it and spend it determines whether your money will be a force that creates good or doesn’t create good for you and others.”
– Sanaya Roman  & Duane Packer

Money is such a huge part of our lives. Money can make us feel generous, stingy, depressed, happy, anxious, at peace, insecure, free. We all go through different emotions depending on our relationship with money. At times, in order to create a significant change in our lives, or those around, we first need to have a money makeover. If you want to have a sense of peace with money, and achieve better wealth read on.

Money is neither good nor bad. Money gives us the resources we need for life.
Having enough money liberates us to create the changes we desire.

I used to feel very insecure about money. When I started working more than 10 years ago, I was earning around $350 a month (in the Philippines). I was spinning my wheels, never feeling enough. The more money I earned, the more I felt I should earn more. I held tight to money. I did not have a wealthy mindset.

I wanted to have more financial freedom. I started reading about investments, creating money and abundance. I attended seminars around having the right mindset to ahieve wealth.

It took me years of learning to “let go”, redefining my relationship with money.  As I let go, I became more generous to myself and others. Recently I started to overcome my financial insecurities. For the first time in my life, I felt wealthy — or at least secure  — enough to finally quit my job. For the first time, I earned in a few weeks what it took me a year to earn few years ago.

I am now on my mini-retirement, giving myself as much time as I need to explore my other passions. I now have time to give back more to the community, starting with this blog.

I learned a simple system of managing money. It creates a positive change: first, in the way one relates to money, and second in how money is manifested.

This system is the 6Ls to better wealth:
six buckets to organise your money,
six buckets to change your life.
Try it!

1. Liberty account –  10%

Whatever you earn, whenever you earn, pay yourself first! Money should liberate us to live the life we desire. The liberty account is therefore the most important bucket to put your money.

Immediately set aside 10% of whatever you earn into this account. You could automatically deduct the 10% of your income, and have it debited into an account. You then leave it — you never, ever spend it. You simply save it. You invest it. This money is an investment in your future. This money is your key to your financial freedom. This money is your “golden goose”.

2. Long-term savings account – 10%

Next, set aside 10% into a long-term savings account. Unlike your liberty account, this  money is for spending on big ticket items that are important to you: car, travel, big celebration, etc.  Feeling wealthy is being able to address what are of value to you. It does not matter what other people think. Spend on what you value!

3. Learning – 10%

Education is your leverage to become wealthier. Invest in your mind — it is your most powerful and important asset. More specifically, invest in learning how to be wealthier and more abundant. You may lose money, but the lessons  you learn stay with you to continue building again.

4. Living – 55%

Of course, most of your money goes into your day-to-day maintenance. We all have to pay the bills. We all need food, shelter, clothing, utilities, etc. Some of you maybe asking: I am already so stretched with 110%, how can I even manage with 55%???

We probably need to look more closely into our day-t0-day spending. We could easily, mindlessly spend. We make a necessity of the unnecessary: alcohol, smoking, partying, gym and club fees we never use, gadgets to keep up with the Joneses, etc.  While I have never changed my phone for 6 years, I have seen people who “struggle financially” yet always equipped with the latest gadget, designer clothes and accessories.

I too have my own unnecessary expenses. I used to spend $150 every week eating out for lunch everyday, with the occasional coffee and breakfast takeaway. I managed to save at least $40 a week when I cut down the coffee and the brekkie. As a bonus, I felt healthier!

Since I quit my job in the corporate jungle, I now save myself $150 a week. Not to mention the cost of commuting to and from work of $50 a week. I now only occassionally spend $30-50 eating out. That still saves me at the very least $7800 a year! I’m not saying quit your job: I’m just demonstrating how much those seemingly “small” habitual expenses accumulate real big, real quick!

The money I saved from unnecessary habits now gives me more money for “Living'” without working.

5. Leisure – 10%

This is fun money! This is “blow it out” money! This is your permission to go crazy and wild without regrets. This is the money you spend anyway, anyhow, anywhere on anything without judgement. 

You can buy a hundred red balloons for work, buy yourself a bunch of roses or a box of chocolates, splurge on that whole body spa, buy that pair of designer shoes, treat your whole family for lunch or dinner for no reason at all, spend your weekend at a 5-star hotel, etc. Just make sure you have enough in this Leisure bucket!

Why have this money? It helps to create a sense of power, that you could do anything with money without fear, without care. It creates a certain detachment. The simple act of spending without thinking is like saying “Money, you don’t rule me. I rule you.”

This Leisure bucket is psychologically liberating to spendthrifts. It kills the Scrooge in all of us!

6. Loving/giving – 5%

When I am more giving, I feel richer. Giving not only refers to money. Sometimes, donating time to the community can be even more valuable than just writing a check to charity.

Having said that, allocating a certain amount of money that I give, reminds me how blessed I am. This is not about giving alms to appease my guilt. Nor is it about giving in order to look good to others.

This bucket has a psychological and spiritual benefit. This is about knowing there is enough money to give, because  that money is already set aside and ready to be given out. Giving from a position of having enough, and not from a position of obligation or guilt, comes with a feeling of being  blessed. It is enriching. It provides a feeling of being privileged to be able to share one’s blessings. Most of all, giving becomes an exercise in gratitude.

One time in a train, I overheard this lady making calls. She was just talking loud enough that I kinda made it out that she was desperate but not looking for charity: she just needed a chance to get through the day. I tapped her on the shoulder. I randomly gave her $50, looked into her face, smiled, said “have a nice day”, then alighted the train. I felt really blessed with a deep sense of gratitude to the Universe that I had enough in my Loving/giving bucket to give.

It is an affirmation of wealth where you start feeling “I am thankful for what I have and I am thankful that I could share it.” The act of sharing, spreads the feeling of being blessed and the feeling of gratitude. In turn, giving inspires more giving.

Note: I learned the above concept when I read the book “The Millionaire Mindset” by T. Harv Ecker. I subsequently attended the workshop. While I came up with the 6Ls, the six bucket concept is an adaptation of the financial management  system I learned from the workshop.  I am still learning.