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“If you had a better plan, you would have more money.” —Earl Schoaff


A Better Plan?

When my mentor, Jim Rohn, was asked by his mentor, Earl Schoaff, why he did not have a plan for his money, Mr. Rohn responded, “If I had more money I would have a better plan.” Mr. Schoaff wisely responded, “if you had a better plan, you would have more money.”  This really resonated with me.  I mean, I never really thought of a plan to have more money in this regard.  My plan was always, “if I need more money, I will work more hours.”  That was my plan…that was the best I had.  If we were going to be short on cash, or we needed to buy a lot of things this week, I would tell my wife that I have to work an extra night.  Or I would decide to work through dinner to pick up some hours.  I guess that was my plan.  If that still wasn’t enough extra work, I would start to think about what extra days I could work, even weekends, to make the money we needed.

Trading Time For Money Is Not A Plan?

My thoughts always came back to trading time for money and I would simply plan to work more hours to make more money.  I am sure you know by now that this is not a good plan.  It doesn’t scale, it takes more time from my family, and if I slow down the next week, I would make less money.  This is a pretty bad plan.  This is me responding to life and letting it happen rather than me stepping up and taking charge of my financial future.

Do you find yourself in a similar situation?  Are you trying to manage your purchases  by making more money, or do you have a plan where you manage your money so you can make smart purchases?

Pay Yourself First!!!

The plan I subscribe to is “Pay yourself first.”  You may be thinking, “Duh…I get the money first and then I pay my bills and buy stuff.”  That is not what I’m talking about here.  I’m saying that before you pay your bills, before anything else, you have to take some money and put it in these three buckets:  

  • Investments
  • Savings
  • Charity

Once you have put money in those three buckets, you can take the rest and pay your bills, make purchases, etc…. The thought here is that no matter the circumstances, before you pay any bills or buy anything else, you have to invest in these three buckets.  You may be asking, “Why these buckets?  How much in each bucket and how do I do I get started?”

Let’s start off talking about the buckets of money.

What Are These Buckets?

The Investment Bucket is a bucket of money that you have earmarked for putting into something to make your money grow.  For example, you can invest in the stock market, real estate, or even in yourself.  The goal is that you put money into something and shoot for the best return on investment you can get.  And yes, you can even invest in yourself.  I am not talking about taking the money and buying things for fun.  I am talking about buying books, going back to school, or going to a few seminars.  The hope is that this investment of money will bring more money back to you.

The Savings Bucket is exactly what you think it is.  You need to have some money put aside for two things.  One is what Dave Ramsay refers to as an Emergency Fund.  This is a fund of money where the goal is to put at least three months of living expenses into.  The thought here is that if the worse were to happen, you would have a nice bit of money to see you through.  But remember, it has to be an emergency and the latest sale of big screen tv’s or clothes is NOT an emergency.  The second place to put your money is in a simple Savings Account where you can earn a little interest on your money and have money available when you want to make those larger purchases.  Are you guilty of paying for things on your credit card?  If you are, that is a bad plan.  Save your money in your savings account and once you have what you need, make some larger purchases from there. 

The Charity Bucket can be an even harder one to put money into.  You are literally giving your money to someone else who needs it, never expecting to get it back.  “5and2Guy…are you crazy?”  No, not crazy.  Hear me out.  I strongly believe that you have to give in order to receive.  If you do not give of yourself and what you have, it will not come back to you.  You see, giving starts the receiving process.  I can honestly tell you that I always put money in this bucket and have seen over the last few years money come back to me in ways I never expected.  Trust me on this one.

How Much In Each Bucket?

If you can, try and put at least 10% of your income in each bucket every payday.  Yeah, I know.  That is 30% of your pay.  That’s a lot and trust me I understand.  Maybe you can’t start with 30% of your pay.  Maybe you can only start with 3% of your pay.  No worries, put 1% in each bucket.  My mentor Jim Rohn says, “It’s not about the amount.  It’s about the plan.”  Make a plan to put this amount of money into these buckets every payday and then adjust the percentages as you start to make more money.

How Do I Get Started?

I read this great book by David Bach titled The Automatic Millionaire.  This book talked about automating everything possible with your finances.  Sort of a set it and forget it approach.  This was great.  I took the time to figure out how much money I could put in each bucket, set up the automatic transfers and started to just sit back and watch it grow.  And that is exactly what it started to do and is currently doing.  To summarize, you want to automate the transfer of money to all of these buckets either from your employer or your bank account.  If you get paid on Fridays, automate the percentage of money you want sent to each bucket to occur on that Friday.  Your savings will automatically grow, your money for investments will automatically grow, and you will automatically be giving to a charity.

For the Investment Bucket, you can have a savings account set up where you dump money into it.  From there you can automate into where you want your money to go.  I have my investments pull from this account regularly and just make sure I keep more money in it than I am taking out.  Once it builds up quite a bit, I may take a chunk of it out and invest it manually into something.

For the Savings Bucket, you may want two accounts.  One for the Emergency Fund and one for the actual Savings Account.  Just split the money between the two.  Perhaps more into the Emergency Fund until you have reached three months of expenses saved up.

For the Charity Bucket, try and find a charity that will allow you to automate transfers to them.  I have automated transfers to my church every month.  I told the site that I wanted to donate a certain amount of money each week and they pull it out once a month, depending on the number of weeks in the month.  This is great.  I don’t have to worry about having cash or a check on me when the collection comes around in church.  Yeah, I do feel like people may think I never give money, but that is okay.  That is there problem, not mine.


As Jim Rohn said, “it is not about the amount, it is about the plan.”  I think this is a pretty good plan and works well for me. I forgot to mention that each year, I try to up the numbers in my automatic deposits I send everywhere.  My goal is to do that every year and to become even better with money.

This plan seems to be working. I now have a positive net worth, pay myself first, have all my bills paid, and have a pretty high credit score.  A good by-product of this plan is that I am learning more about money and continue to learn more each week.

If you are struggling with money and need a better plan, you may want to try this one on for size.  I think it’s a winner!!!

Two Great Money Books:

  • I Will Teach You To Be Rich by Ramit Sethi
  • The Automatic Millionaire by David Bach

You can pick these books up on Amazon with our affiliate links here:

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