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Hi Team,

Last week I introduced the subject of financial intelligence and over the next 5 or 6 weeks I will walk you all through the key topics that are central to this especially important subject. This series of weekly emails will be a brief summary of what I have learnt over the last 30 years of running a business and owning and developing numerous properties, as well as my key learnings from several books and podcasts. If you would like to learn more about any or all of these topics I would recommend that you read some of the books that I will be referencing along the way.

The common central message from all of these financial books and podcasts is that the key to long term financial success and independence is good money management. To be able to manage your money you must have a plan or formula and the plan must be simple and easy to follow. To be effective your money management plan must become part of your daily routines and habits and be sustainable long term.

 ??????"People who succeed don't have more willpower than you; they just develop better daily routines and habits." Roy Baumeister

The best money management plan I have come across is the "4 Bucket Plan" by The Barefoot Investor, Scott Pape. This plan consists of four "buckets" (bank accounts) that you use to divide up your income and savings and to manage your money as follows. (The key is to commit to a plan then stick to it!)

1. Everyday living expenses. 60% of your total income should go towards your everyday living expenses, with the approx. breakup of 30% housing costs (rent or mortgage), 10% power + utilities, 10% transport, 10% food.
2. Emergency Fund.  A separate bank account that is set aside for unexpected emergencies. Having an emergency fund can greatly de-stress your life. Financial stress can be very intense and debilitating and can be avoided by effectively managing your money. The Barefoot Investor recommends that you have a minimum of $2000.00 per person (up to a maximum of 10% of your income) held in a separate account that can only to be spent on emergency expenses.
3. Growth savings account. (Investments) 20% of your total income should go straight into savings and investments, including superannuation, investment funds, education savings, investment property etc. The aim of the growth savings account is to get a little bit wealthier every day. This growth account has the ability to double in value every seven to ten years with the power of "compound interest". (I will discuss compound interest in more detail in future emails).
4. Splurge account. By following this simple money plan, you will have 10% of your income available to spend on things that make you feel good, such as dining out, holidays, sports + hobbies etc.

This money management plan is very simple, but if adopted and followed long term, it will change your financial future and set up a stable and independent source of wealth for future generations. The greatest investor on the planet , Warren Buffet, has lived by the following rule all his life and look where it has got him!

"Do not save what is left after spending, but spend what is left after saving."

Thanks for reading,
David.