The book Money Honey is written by Rachel Richards, a financial advisor who quit her job at 27 and started living on a passive income of $15,000 a month. Money Honey was her first Bestselling book in which she achieved “bringing humor and sass to the dreaded subject of personal finance.”
This book is all about changing the way you think about money. It is an insight into the things you shall start doing to manage your finances like creating a budget, paying debt, investment, stock market, and more.
The book teaches us financial freedom as a goal.
Rachel Richards shares 7 strategies to bring your financial sh*t together. Learning about a problem is of no use unless you act upon the solution. She shares 7 steps to financial freedom that are:
1. Denial is a Beast – Accept Your (Financial) Truth
As George R.R. Martin, A Game of Thrones said;
“Most men would rather deny a hard truth than face it.“
How can you change something for the better when you are not accepting the reality. To know from where to start you must know where you are stuck. How much you earn, what loans you are to pay off, and so on. Being honest to yourself regarding money matters is the only way and the first step towards your financial wellbeing.
2. Set Financial Goals
Once you know where you stand. This is enough eye-opener. Now decide what is the top priority on your list? Paying off debt? Or save money? Or plan retirement? Write down all your goals.
3. Grow Your Golden Number
By saying this, she refers to amount you allocate to your goal buckets. If it is not enough, you first need to focus on increasing your golden number.
In the same book, she talks about increasing your income and decreasing your expense.
4. Start Filling Up Your Savings Bucket # 1
Richard suggests 4 buckets rule. One for emergency situation, second for medium term savings, third is long term saving and fourth is retirement plan bucket.
As per Money Honey, your first bucket should be your priority.
5. Determine Your Contribution Amount for Bucket No. 4
Once, you have set those buckets, every month without delay and a second thought, you are supposed to contribute to this retirement account.
6. Prioritization is a Key to Achieve Goal
Bucket#4 was the priority. Now that you are filling up that bucket, you need to pick your next goal. It is all about your personal priority. You better figure out what works for you and what comes first.
7. Never Skip an Annual Review
Every year review the process and re-evaluate where you stand. Look at the ways to grow your golden number. This drill will help you stay focused.