Pie Method--An absolute way to achieve a perfect money distributionDec 14, 2021
According to a report from the PEW Charitable Trusts, about 80% of Americans are trapped in debt. This is an insane figure! While debt may feel like just an inconvenience to some people, it’s ruining the lives of single/divorced women. Since it gets hard to pay off debt, preparing for retirement looks like an unachievable goal. According to the latest GOBankingRates survey 2019, about 64% of Americans aren’t prepared for retirement. That means 64% of Americans would retire broke if they put no money aside.
Those stats are not shocking to me because I meet such people every other day. If you’re also one of those who doesn't have enough money in their retirement funds and don't know how to do that, then keep reading.
Often, when I ask my clients why they didn’t have enough retirement savings, their response is always one of the responses mentioned below:
“I don’t make enough to save.”
“I’m struggling to pay bills (rent, mortgage, car payments).”
“I’m prioritizing paying down debt.”
"I used the money for an emergency."
(Can you relate to any of those responses?)
Ever wondered why it happens when you try to focus on your financial life area, say paying off debt, your other financial areas get neglected, say your living expenses? In doing so, your financial life gets messy. An ideal way to save cash without compromising the quality of life is to maintain a well-balanced money distribution over your expenses. This way, you can save for retirement while paying off your debt. Today, I’m gonna show you this absolute method to gain clarity about your finances and feel empowered about your spending.
The plan your income and expense method or Pie Method is a revolutionary way to feel intentional about your money by creating a spending plan instead of a budget. Using the Pie Method, you can achieve a perfect distribution of money that’ll help you to create a financial backup and grow your hard-earned money.
Have you ever noticed that when you try to keep up with the budget, you feel restricted? This is because the budgets are not sustainable, so you can’t follow them long-term. That’s the reason why you’re struggling to reach your financial goals. On the other hand, a well-thought-out Spending Plan can be used for the longer term. Having a spending plan is quite liberating because it ends financial strain. That means you no longer have to worry about the money shortage at the end of each month. You get more time to focus on attracting opportunities to grow your money.
When you switch to The PIE Method, you will learn how you can live within your means, set your priorities, have fun and save up cash without any hint of financial stress. Not only that, but it will also help you intuitively feel more connected to your money.
Now, you must be wondering what a perfect money distribution in a PIE looks like. To simplify, you can consider your income (after taxes) as a complete PIE. Now, you decide how many portions of your PIE go to your expenses and how many you save for yourself. Sounds easy?
So, in an ideal PIE money distribution, 50% of your income goes to your living expenses, 30% to your fun fund, and 20% to your freedom fund.
Let’s break it down.
Your living expenses may include mortgage or rent, utilities, car payments, car insurance, gas, and groceries. Ideally, 50% of your income should be enough to cover these expenses.
Your fun fund reflects your life standard and lifestyle choice. You can do whatever you want with this amount. It can include traveling, vacations, nice meals, personal care, shopping, etc.
Your freedom fund is what the whole story is about. This amount is for your retirement, investment, or emergency savings.
As a rule of thumb, at least 20% of your income must go to your freedom fund, which should grow monthly. This amount will give you the savings wings to fly off the financial stress.
But here’s a catch.
The PIE Method has room for flexibility. That means you can adjust your money distribution based on your priorities. Say, if you’re the one for having a nice home matter most, you can cut some %age from your fun fund and add it to your living fund. Or, if you’re the one for whom savings come first, you can cut some amount from the fun fund and add it to your freedom fund. That means you can just play around with your fund amounts if you don't compromise your freedom fund. This way, you can keep up with your priorities and have a little fun without compromising your life’s quality.
So, it's time to create your PIE if you’re stuck between managing your debt and saving up for retirement. Well, if you think you can set up your priorities, and achieve a perfect money distribution without getting confused, then more power to you. But if there is the slightest chance you drift and lose track, don’t hesitate to reach out to me.
As a financial coach, I help professional women like you reach their financial goals. Be it about your retirement planning, debt management, or investing your money, I will help you devise strategies to gain the financial freedom you have been dreaming of for so long. If you’re genuinely motivated to take charge of your finances, hop over my online schedule now. Let’s sit together, have a heart-to-heart non-judgemental conversation, and create your custom spending plan today.
Remember: Financial freedom is the path to success
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