I’ll never forget my financial difficulties…

Even when I started making a lot more money, I was still reckless with it.

I spent it like it was going out of fashion, and invested in 10 bad tech projects which lost me A LOT of money.

One of the most important things to have in your arsenal is your ability to manage money, no matter how much you earn…

Because, if you can’t manage $5K per month, you won’t be able to manage $50K per month.

Managing money is a habit and skill, however, a lot of people think they’ll be able to manage money better the more they earn.

But what always happens, is the more they earn, the more they spend.

So, in this week’s newsletter you’ll discover some of the ways I like to manage money, and how to ensure you keep more money every year.

Let’s begin…

3 Financial Goals You Must Have Every Year

If you want to succeed financially, there are 3 things you absolutely must do.

This is outside of investing, which is a whole other topic,  because if you don’t do these things, you won’t have any money to invest.

I’ve already sent out a newsletter on how to invest your first $1K.

You may like to check your inbox for that one, but as a recap, I believe the best way to invest your first $1K is by reinvesting in yourself.

That will give you the biggest return month on month.

So here are your 3 goals.

1. Increase your earnings by at least 10% per year…
2. Increase the amount you save each year…
3. Increase the percentage of your income you save…

Really, if you achieve goals 1 and 3, you’ll achieve goal 2 at the same time.

How To Know How Much To Save At Different Income Levels

As you earn more, you should naturally increase the amount you save.

If you don’t, you’ll allow yourself to spend all the extra money you earn, and you’ll never make any progress.

So here’s how much you should save at every level of income up to $1 million.

Less than $50K save 10%.

More than $50K but less than $200K save 15%.

More than $200K but less than $500K save 25%.

More than $500K but less than $1MM save 35%.

More than $1MM save 50%.

It’s important you don’t fall into the trap of living a lavish lifestyle as your income increases.

I know it’s tempting, and there’s a time and a place for that, if you’re making a lot of money.

The good thing is, you don’t need to make millions of dollars to live an amazing lifestyle.

If you follow what I teach in my book FU Money, you’ll see you can live your dream life without earning millions of dollars.

How To Allocate Your Money Effectively

Believe it or not, money has 4 jobs.

To spend, save, invest, and donate.

It’s important you give to causes or people less fortunate than yourself and pay your success forward.

So, how do you manage your paycheck each month, so you have money to save, spend, invest, and donate?

Here’s how.

I learned this strategy from the book The Richest Man In Babylon by Samuel Clason.

For the purpose of this exercise let’s pretend you make $1K per month.

Each month you’ll put a certain amount into a designated bucket so you know how much you can spend, save, invest, and donate etc.

Necessities = 60% or $600 

Investing = 10% or $100

Learning = 10% or $100

Emergency = 10% or $100

Fun = 10% or $100

As you can see above, we’ve allocated the full $1K to different buckets.

You can keep track of these in a spreadsheet each month or put them in different bank accounts.

You never want to touch your emergency funds, unless you absolutely need to, and it’s important you only use the money in each fund for its specific purpose.

The fun money you can do whatever you want without feeling guilty.

3 Money Traps To Avoid Like The Plague

Unfortunately, there are many money traps the average person falls victim to during their lifetime, that kill their chances of financial success.

Not Having a High Income Skill

You hear me talk about this particular trap all the time, and that’s not having a high income skill.

I believe everyone who wants to be financially successful should have a high income skill.

Because, compared to a high income job where your company decides what your income is, the better you are with your high income skill, the more money you make.

Not Having Financial Goals

I’m always shocked when I ask people what their financial goals are, they don’t have a specific answer for me.

If you want to be successful, you must have clearly defined financial goals.

“Making more money” isn’t a financial goal, it’s a wish and a hope.

“$10K per month” is a clearly defined goal.

It tells you how close or how far you are from hitting your goal.

So, get clear on the amount of money you’d like to make, and if you can’t hit that goal with your current job, then it’s time to upskill to something that will help you get there.

Once you hit your goal and can maintain that level of income for at least 6-12 months, it’s time to set a new goal.

Not Being Financially Literate

As making money is the whole reason you go to school, you would think the school system would teach us how to make, manage, keep, and multiply money.

But unfortunately, it doesn’t.

And although it teaches you to read and write it doesn’t teach financial literacy either.

What you don’t know can hurt you, so you must take it upon yourself to become financially literate.

If you want an overview of financial literacy, then click here for a beginners guide >>

There are 3 more money traps you could find yourself in, so click here and watch the first 3 in this video I shot for you >>

There’s a lot more we could talk about it, but I think you have enough to work with.

If you implement just a few of these strategies, you’ll be in a far better position financially in the years to come.

To your success,

Dan Lok

P.S. – You hear me say it all the time, but a high income skill is your key to making more money, even in your spare time on top of your 9-5.

If you’re yet to begin developing your first high income skill, then click here to check out some of our trainings at the Dan Lok Shop >>