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Managing Expenses: Discover the only 3 expenses that actually make you wealthier

Buildthelifeofyourdreams

When most people think about managing expenses, some sort of fear sets in.

They wonder, “did I spend too much?” or “where does all my money go?”

Or they think, “I shouldn’t have bought that…”

The bottom line? “Expenses,” to most people, is a dirty word.

However, there are actually 3 expenses that make you more money…

And, they’re just one small part of a “30-Minute Cash Flow Breakthrough” designed to help you increase your bottom line without working harder (more to come in a minute…)

#1: Rainmaking (Productive) Expenses

Hiring the right employee, getting the right equipment, creating the right marketing campaign, or joining the right mastermind group are all considered “rainmaking expenses,” and can pay for themselves many times over.

If spending $1 on a productive expense makes you $2, then the idea would be to keep spending until performance goes down.

Other rainmaking expenses keep you functioning at peak performance. For example, quality food, your gym membership, and other hobbies and passions.

And lastly, education – as long it’s applied, taking massive and unavoidable action rather than put on the shelf – can be one of the greatest productive expenses as well. This includes reading books, listening to podcasts.

#2: Protective Expenses

Protective expenses help you safeguard your family, your productivity and your way of life.

Six months’ worth of savings, appropriate insurance to cover all areas of your life, and a solid plan for emergencies all fit into this category.

You may not know this, but a hidden benefit of spending money on protective expenses is that they help you to be more productive. There’s far more room for creativity and productivity when your mind is free from the worry and stress that comes from uncertainty.

Over time, this added production will increase your cash flow and your wealth exponentially.

#3: Lifestyle Expenses

Special experiences with your family, vacations, dining out, or the latest iPhone or gadget – all lifestyle expenses – have the power to rejuvenate your spirit and help you to enjoy life along the way.

They’re part of the reason you work so hard in the first place, and they actually allow you to be more creative and productive by recharging your batteries. This, in turn, helps you increase your wealth and cash flow over time.

The only caveat to spending your money on lifestyle expenses is that they must be managed well. That means that it’s best to pay in cash, rather than to use credit.

The other expenses  make you poor and miserable. This is what is termed as “PAY DAY- TO PAY DAY TREADMILL” You keep on running but you don’t go anywhere.

In the same way you allocate money for  monthly expenses and there is NEVER enough for savings and future FUNDS.

1.This leads to poverty vicious circle:

Low Income level

Low Savings/No Savings

Low Capital Formation/No Capital formation

Low Returns/No Returns

Low Standards of Living

Early Death

Limited opportunities for next of kin

(We should live inheritance for up to the fourth generation)

2.Exposed to financial instability

§“Low” earnings or “living” beyond means

§Poor management of personal finances

•Lack set goals

•Skewed lifestyle habits

•Uncontrolled purchasing habits

Low savings

Low asset/capital accumulation

Cash flow crisis

3.Financial Literacy produce Financial Stability

Have a plan for obtaining financial resources

Plan & manage personal finances

•Plan their spending through budgeting

•Save for long term financial security

•Have controlled buying habits

Invest earned resources

Insure acquired assets (risk management)

They are in full Control of their financial future

Embrace Financial advice and research a lot.

Analyse Your Current Status

Below you will find an exercise  to analyse your spending and come up with a concrete solution to avoid  leaking points in your budget.

Appreciate your financial position(net worth).

Through the expense tracker identify the spending leaks and rectify them.

Use your budget to guide and control your expenditure.

Set up financial goals and identify a plan of achieving them.

After this exercise, you are now well educated to plan and set your financial road map.

EMERGENCY FUND

Establish your monthly expenses – The fund should be equal to 3 months expenses for a start & 6 months in the long run for financial freedom

Create an account for it. Apply 40/60 rule

Clearly define an emergency

Deposit all windfall income into this account

Refund all monies withdrawn from this account

When fully funded, channel the allocation to another goal

Debt Management Fund

Identify and list all your debts

Prioritize how they will be repaid starting with those with high interest and are short term

Consider the risk and consequence of default

If possible consolidate the debts and renegotiate with the lenders to ease repayment

Build your credit score and borrowing ability

Build your social capital

Always establish the cost of money and lending conditions

EDUCATION PLANNING

You plan for your education and your spouse as well as your children and answer the following statements:

Is education important?

Duration in school ( Term)

Education environment (Formal, informal, international)

Education choice (Private, public, County, National)

University level (Public, private, abroad)

Cost of education ( Current costs, future costs; Future cost = Present cost * inflation factor)

§Funding options for the education- centrelink or self-funding

RETIREMENT PLANNING

The earlier you start the better chance you enjoy your retirement, no regrets. Refer to previous lesson on “Life Time Study”

Establish your re-current monthly expenditure

Estimate retirement spending needs

Consider amount of time left to retirement date

Determine planned retirement income & most appropriate vehicles to generate it e.g. employer-sponsored pension plan, real estate, annuities and other investment opportunities.

Establish & implement a retirement plan

DO NOT SUBOTERGE YOUR LEGACY LEAVE YOUR ESTATE IN ORDER!

I read a story of how a widower left her estate at the mercy of someone else instead of her children. It was too late to fix it. Her estate was managed by court appointed trustee and I quot:

“Several areas of estate planning become more important than ever before for the surviving spouse. Whether you have been through probate or not, whether you have a will or other estate planning documents in place or not, YOU MUST REVIEW, UPDATE, AND/OR CHANGE what you have in place now.



It is more important than ever for you to have an estate plan. If you become disabled and have not planned properly, a court-appointed trustee will handle your affairs. If minor children are involved, the court becomes their parent.


James and Annie were both in their early 80’s. They had farmed all their lives and had several hundred acres and sizable deposits in several banks. Their estate was well over $1,000,000 and estate taxes would be substantial. No estate plan was in place and they were very close to their only son, James, Jr. Annie took care of the home and finances. James took care of the cows and the farm. They had visited with their financial planner and attorney three times over a six month period. The attorney gave them a list of information needed to prepare the documents (legal descriptions, charities, dates of birth, etc.)


The following week Annie suffered a massive heart attack and did not survive. Her daughter-in-law found a shopping bag at the foot of her bed containing the information needed for their estate plan. But it was too late.

No one likes to think about planning his or her estate. Estate planning is the easiest thing in the world to procrastinate doing. However, you must do it for both you and your loved ones. You need to be the one making the decisions that can best take care of yourself and your family. The following paragraphs may help guide you but ultimately you are the one responsible for making those decisions.


Keep in mind that a good estate plan considers your goals, your needs, and your objectives by giving what you have accumulated to whomever you want, designating when you would like for them to receive it. This needs to be accomplished with the least amount of court fees, attorney fees and estate taxes.
We have looked at wills and probate which generate court costs, executor and attorney fees. If you must go through the probate process, have the attorney outline the fees and estimated total cost up front. The attorney who wrote the will does not have to be the attorney who probates the will. Obtain at least two, preferably three estimates”. David E. Taylor

Do you have named guardian for your children?

Do you have named beneficiary for all your investments?

Do you have a plan to distribute your assets?

Do you have a will?

Are all your documents properly secured?

DG Institute offers this service at a competitive rate to its DGI community members. If you need to set up one, leave a comment and I will give you more details on how to get started!


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Author : Charles Vincent Kaluwasha

Founder and CEO of C J Investiment. Charles Kaluwasha is a real estate entrepreneur and developer, specializing in building 2-5 unit properties in Melbourne City and Gold Coast. He currently owns 3 investment properties. He has rehabbed, Flipped and/or lease-optioned over 3 single-family residences using funds from private investors. He has secured 2 investment apartments in Melbourne and Gold Coast to be completed early 2020. A developer of C J Academy/mentorship program helping investors and homeowners with basic and advanced financial education and real estate investing strategies to create passive wealth.

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