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This business coaching lesson teaches the necessary principles to managing your money.

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Featured Coaching Excerpt - Notes & Transcript, Part 1
  • 7 Principles To Manage Your Money: 4. Close the Circle
  • Lesson Nugget: "Closing the Circle" means taking your leftover income after your planned expenses and putting it aside in planned out savings or purposes.
  • Recommended Reading: Wealth, Riches & Money by Earl Pitts & Craig Hill
  • Lesson Nugget: "Closing the Circle" will create stability in your finances which will allow you to grow.
  • Lesson Nugget: If you don't create limits for your spending now, you will limit your ability to achieve your dreams later.

[MUSIC PLAYING] accounting training and time managementlike coursera

-OK here on Thrive15.com, the online platform for marketing, time management, and brandin, it's t ime, now principle number four is called close the circle. What are you talking about when you say close the circle?

-Well it's a term that I got from a friend of mine, Earl Pitts. He wrote a book called Wealth, Riches, and Money. And he used the term closing the circle as answering a question-- a very important question-- cash management. Which is answer the question, how much is enough?

So if we have the circle that's open, that means when we have more income coming in, we're just going to spend it. Or we have a tendency to spend it. When we close the circle, that means we say listen, if I get more income than I have over the budget, I've got a purpose for that to go into a certain savings account or wealth investment account.

There's a purpose for that. There's a destiny for that dollars that I'm going to put aside. And that way I'm not going to be all over the board and allow my lifestyle to go ahead of my income like it does so frequently.

-And I think a powerful example of this would be Warren Buffett. Where he currently actually lives in the same house that he bought in 1958 for a $31,500.

-You think he's got it paid off?

[LAUGHTER]

-Well apparently he doesn't-- he drives the same Cadillac he's had for quite a while. He doesn't have a computer at his desk, doesn't really use a cell phone. And I think some of those things might be things that maybe wouldn't be practical for you if you're watching this, to not have a cellphone or maybe not, But the principle here is that he bought a house a long time ago that serves his needs. He feels very comfortable with the house, and so now he's on to doing other things.

Which with his money, he's blessing a lot of people right now with a lot of his charitable things. But I think he decided at one point he was going to cap his income. And I think I've read where he capped his income at about $175,000 a year.

Which is still a very high amount for a lot of people, but he's capped it there. And it's very unusual for people. Because I think he has a value-- or a net worth-- of billions of dollars. But yet, he's capped his income at $175,000. So it seems like he's really closed that circle like what you're talking about.

-Yeah. Yeah. And this is really, really important for our thrivers here.

-So if you're in a sales position and your income is going up and down month after month, how does this principle apply?

-Yeah, yeah. This is in your sales, you got a business, you're starting the business. Or let's say you're starting to use some of these marketing and sales strategies that we're explaining in these videos. You begin to apply these best practices, and in the process you may have a month that you make $25,000.

Another month you lose $4,000. You're all over the board. So what we want to do, is not have you live a boring life. We don't want our thrivers to live a boring life. But what we want to do, is you want to create stability for growth.

And so closing the circle is saying listen, I'm going to live by this much money. Let's say it's $5,000 a month. So let's say it's a $5,000. Let's say one month I make $8,000. OK, so what you do, is you take the $5,000 you've already got allocated, great, you put that to work just the way you've got that set up.

The $3,000 you put it aside into a savings fund. And let's say the next month you maybe only make $3,000. OK? But you want to live on $5,000. So you've already got stash on that. So you take $2,000 out of that to put in there.

You think yeah, but I'm just not that disciplined. You can be disciplined. It's very simple. By taking the mandatory expenses, you've got your discretionary expenses, then you've got your desired expenses. And then you're living within that particular amount.

And you're not stuck there forever, Clay. Some people say I just don't like living in that bondage. Well what's the other bondage they live in? They live in the bondage of living from hand to mouth, living from month to month.

-There's three things that I heard that you say that I want to hammer then. Is one, it requires making a decision. And you have to start to say that you are disciplined. You have to start to say-- you can't just say I'm not that disciplined.

We need you start to say right now, I am disciplined.

-Thrivers are disciplined.

-I am disciplined, I can do it.

[MUSIC PLAYING]

-Disciplined. Disciplined. Disciplined.

-Disciplined.

-Disciplined. Disciplined.

-Disciplined.

-Disciplined. Disciplined.

-Disciplined.

-Disciplined.

-And the second, is you have to look at savings as actually a form of freedom. And I guess the example would be you have time freedom when you save. So as an example, whenever my wife and I move-- and we have five kids and growing businesses, and so we're always moving.

And every three or four years we move. And when we move, because I've saved money, I can pay a builder to move. And I pride myself on not packing a single item. I'm just like move that, move that, move that. I can't stand it. And so I was able to save time by saving money. And I can pay-- I can basically get time back by paying people to do things I don't want to do necessarily.

-Yeah. You're paying for a hassle free life. You're paying to not have to think about stupid stuff you don't want to think about.

-But that's because on a daily basis I decide to not buy things I don't need. I don't put things in my house I don't need or buy new TVs every week. I just get what I need.

-You're disciplined to plan the work and then work the plan. You're disciplined to follow a plan. Closing the circle is saying, listen, I'm going to live within these means right here. And when I'm all over the board, I'm going to stabilize that.

This is very, very important to build a platform for growth. It's very important for you watching this right now. And what we're saying here, is we're going to create this stability. When we go over, we put the money aside.

And at any time we can say, listen I want to move from living in $5,000 a month. And now we've been topping over $10,000 a month, every month, month after month. I've got all this money in this savings account.

I follow what you're saying Tim. And so now we're going to move from $5,000 to $8,000. And so you rearrange those mandatory expenses, and those discretionary expenses. You set up a plan, and you follow the plan.

[MUSIC PLAYING]

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Lesson Nugget: If you don't plan ahead, one emergency can wreck you financially.
  • Ask Yourself: Who is the boss, me or my money?
  • 7 Principles To Manage Your Money: 5. Be a Giver
  • Lesson Nugget: Giving takes you out of the mindset of just surviving and puts in a mindset of abundance where you live within your means.
  • Lesson Nugget: The annual event is a planning of your financial goals, including where your money is coming from and where it is going.
  • Lesson Nugget: Being a giver is about the mindset, not about the amount you give.

[THEME MUSIC PLAYING]

-And I'll give you an example of what not to do. My wife and I, we have five kids.

[LAUGHS]

-And so our kids are always having a tooth that needs be pulled. They're always needing to go to the doctor for something. It's like there's a constant injury, calamity, disease, dental something going on.

-Last week in your life.

-Yeah. Yeah. And so, like, last week, one of them had to have plastic surgery. There's always something going on. Well, those bills can go like this unless-- and we did this years ago-- but what you do is you say, gosh, you know. It seems random but every few months, something weird happens.

So let's go ahead and just raise our monthly budget and spend a little more for insurance every month so that way those spikes aren't quite as high. But if we don't make an intentional plan, you end up reacting to a monster bill, and then another monster bill, and then another monster-- but if you intentionally plan it and we say this is the budget we want to stick within every month, and we go, how are we going to do this? Well, we have to buy insurance and increase what it covers.

-That's beautiful, Clay. Is you're stabilizing your life where you don't have to go up and down and all over. And what happens-- the closing the circle concept puts you into the boss's seat. Instead of cash being the boss, and you're serving cash-- well, I can't do this because I don't have enough money. I'm doing this because of money-- the money, money, money, money. It's that we're obsessed with this discussion and the creative you is not coming out. And so what this does is it really allows you to take that first principle and say I'm going to be the boss of my finances.

-Now, you talk about the annual event. What does that mean?

-OK, so what that is is we're going to come together and we're going to talk about what we want this year to look like. We've got goals for this share of how much income we're going to start to bring in-- go from a certain level the increase that we want. Where do we want to do our giving? What do we want to give to? Giving is a big part of our life.

What are some things we want to begin to save for? If we're falling below of our mandatory, discretionary, desired expenses, if that's bigger than the income we're bringing in, how are we going to work on bringing more income in? What could we creatively do? I will meet with my financial adviser that's managing a number of my finances for me to get their feedback. But at the annual event is really taking a look at the whole year, where we're going to go with our money and how we're going to get there.

-But you schedule a time to specifically sit down and be intentional about your planning.

-We're going to do that.

-Now, principle number five-- be a giver. What does that have to do with-- now again, I'm just asking kind of devil's advocate. If I'm watching this and I'm like, sure, be a giver, meanwhile I'm trying to, like, buy chicken panini to feed myself while I'm starting a business or I'm barely just now making it. Maybe I'm watching this and I own a bakery and I'm just now starting to get ahead. And you're saying be a giver.

And then I Google you, who's Tim Redmond, and I discover that you've built a company from two people to 450 people. You travel all around the world. You've had a lot of success. So I might look at it and go, it's easy for you to say to be a giver. So walk me through. What does this mean to be giver and how does this apply to me if I'm, maybe--

-Yeah. This is very important. When we talk about being a giver, it's more of a mindset than an amount, same thing as the next principle we'll talk about. It's more of a mindset than an amount. You live to give.

What that is doing is you're telling yourself on a conscious and a subconscious level that you are an abundant person and you're not just striving just to survive, that you can learn to live below your means. And there's some aspect of your life that you can take out of what you have to give to somebody else that's more needy than you are. And there's always somebody more needy than you in the world.

And so you reinforce that mindset of abundance. You reinforce that mindset you are a giver. You're a creative giver. And so being a giver is-- well, it's a whole attitude of life through your services, your creative problem-solving, and through financially even giving.

Featured Coaching Excerpt - Notes & Transcript, Part 3
  • Ask Yourself: Is giving a part of my lifestyle?
  • Lesson Nugget: Giving opens up your mind to thinking about the world in a more positive way.
  • Lesson Nugget: Giving not only helps those you give to, it actually helps your mental attitude.
  • Notable Quotable: "Money reveals and magnifies what is in your heart." - Power to Create by Tim Redmond
  • Lesson Nugget: You can see what someone values by looking at what they spend their money on.
  • "One thing we learn from these wise people is that giving is a test of maturity. Those who are truly grown-up, give. The immature do not. It is wise to practice giving in every area of life. Giving, happiness, prayer and mind power are four building blocks in the formation of a fulfilled existence on earth." - Sir John Templeton

[MUSIC PLAYING]

-Are you intentional about giving? Are you intentional, or is this just sort of now habitual for you, where you just do it out of habit?

-Yeah, well, I'm intentional in I giving over what we have set up.

-OK.

-So like I believe in tithing. And I happen to give 10% to my church. And they take care of all kinds of outreaches that I participate in, my kids, and my wife, and I participate in. And that there's a lot of different programs, community affairs. There's something you guys were involved with even today that was just outstanding earlier today.

You know, so I find different things, my wife and I will find different things we want to give to help support, to help those people. So there's intentionality there. But most of it's just by rote. It's like, this is in my lifestyle. It's part of my budget. It's part of my mandatory obligations.

-I want to hammer this home real quick, though. Because there's somebody watching this who's a crazy giver like you, or a nuclear giver. Like, you will give everything possible. I met a lady years ago who was trying to start this home-based business. And every time she'd have $1, she would give it away, almost at like a panicky-- like, I need to give it away. I--

-That's more fear-driven than generosity.

Yeah. And her story was, you know, I grew up poor. I want to help people who are poor, always giving money to family. What we're talking about is being intentional about what you're giving, setting aside a specific amount. And if you're not familiar with the word tithe, and let's just pretend that you're not a Christian or you don't believe in the Judeo-Christian worldview, the principle of tithing is setting aside 10% to give to a charitable cause.

And I would just argue if you're watching this, if you look up-- you just get a chance to research the life of John D Rockefeller, or Sam Walton, or Russell Simmons-- I mean, all different people. They all have a systematic approach to giving. And the kind of the sneaky part about giving is when you give to somebody else, you actually feel better about yourself. So it's interesting.

And there's a quote here that the famous investor, Sir John Templeton, the founder of the Templeton Fund, said, one thing we learn from these wise people is that giving is a test of maturity. Those who are truly grown-up give. The immature do not. It is wise to practice giving in every area of life. Giving happiness, prayer, and mind power are four building blocks in the formation of a fulfilled existence on earth. What is he talking about as it relates to giving there?

-Giving is really a whole attitude, where you look at all of your life. Either you can be a consumer that's just-- it's all about you. Or you can look at yourself as the whole basis of this Power to Create book is your primary purpose is to create value to serve other people. You're living to give.

And so as it relates to your financial management here, you want to set money aside, even though you may be that baker that's just starting out, and that how in the world am I-- I can hardly feed my kids and pay the bills. How can I be giving right now?

Well, it's giving the quality. That's what Sir John Templeton's talking about, giving the quality, making sure that your customers have an experience with you. But also, it's good just to learn to live below your means, where you're putting money aside to give. It is actually an expression of gratitude.

Giving, what giving does is it reinforces in your mind that you are an abundant creator. You're living from that place of contribution. You're living from the place of abundance. And literally, when Jesus said, it's more blessed to give than receive, and almost every great philosopher and world leader talks about the power of giving and living to give, we're talking about how we're wired as people.

That when you give, especially when you give with this sense of hilariousness or a positive mindset, or this really, this powerful emotional state. You're literally tapping in the reward center of your brain that activates. It creates these attachments, that this is a good thing. And it expands your mind be able to see-- you literally began to look at problems as opportunities. You begin to expand your mind to look at life completely differently when you learn to live together. And I think that's what John Templeton was talking about in the power of getting.

-Now, Tim, you make a profound statement in your book called The Power to Create, where you say, money reveals and magnifies what is in your heart. What do you mean by that?

-Yeah, it's a point where money magnifies. OK, so a lot of people will say, well, hey, listen that person didn't have a lot of money. They got a whole lot of money at one time. Money ruined them. Well, did money ruin them? Or did money just reveal what was already in their heart?

See, money magnifies. And what we're talking about here is when we're talking about managing our finances and putting money aside to be able to give, money is going to magnify your heart. Money is going to magnify your values. So I can look at your credit card statement. I can look at your checkbook. I can look at your bank statement. And I'm going to see what you value here. I can see that that money is carrying out your purposes, the discretionary money, and the desired money. And where you're spending that is going to let me see what's really in your heart.

-If you really peel into my financial statements, what you'll notice is that I spend a huge amount of money on replica jerseys and not much of anything else.

-You spend a lot of money on those kind of jerseys and you spend a lot of money and buying books.

-That's true. I'm a big book buyer.

-You buy books for yourself. And you buy books for about 100 other people that you love, or you want to eventually love if they'll read the book.

-That's true. It's a conditional love. Read this book, and I'll love you.

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