NeFiPELoG Money Management System?

Under "Is There a Simple Money Management System (MMS)", you were introduced to the NeFiPELoG system. You need some elaboration on the six accounts that T Harv Eker came up with?

Ne = Necessities Account. This is the 50% of your income (after taxes) that you use to pay for your necessities, for your basic needs, such as your food and lodging. Without these necessities, you would not be able to live, or go to work.

Fi = Financial Freedom Account. This is the 10% of your income that you only use for investments. Or buying/creating passive income streams. The income derived from these investments must not be spent! It is to be further invested. Only when you retire (not necessarily at the formal/official retirement age) can you spend the passive income (i.e the principal remains untouched).

P = Play Account. The 10% of your income put into this account has to be spent every month! Why? Because if you just save, you may become addicted to saving only, and may become miserly. To nurture the habit of feeling good and being able to do things that your heart really desires (yes ladies - that cute Gucci hand-bag to match your sexy red shoes!), this play account money can be spent on anything that you fancy for the month. This makes you a 'holistic' person (I don't know whether you will turn into a holy man ... hehehe).

E = Education Account. You are familiar with the saying: "If education is expensive, try ignorance". This 10% of your income is for you to buy books, attend seminars, or pursue a course of study to improve your knowledge and skills. I met the General Manager of the Cameroon Development Corporation (Africa) in 1993, and found him very knowledgeable. I was impressed, and asked him his secret. He mentioned that when he was overseas and at the airport, he would buy books, because it was quite difficult to find a wide choice/range of books in his country. A few years later he was appointed the President of the Republic of Cameroon. They picked an excellent person. The right person, don't you think?

Lo = Long-Term Savings for Spending Account. This 10% of your income differs from the Financial Freedom Account in that it can use it anytime (and not only when you retire). The principle is that if you want to spend something, do not take a loan (especially a credit card loan!). Instead, save 10% of your income, and then spend when the accumulated savings is enough for you to buy the desired object (e.g. a new bedroom or sofa set, or a vacation to Tioman Island or Bora Bora).

G = Give Account. This 10% of your income is to be given out to your favorite charity or religious house. Winston Churchill said, "We make a living by what we earn - we make a life by what we give". Do you agree?

What is the moral of the story? If a multi-millionaire like T Harv Eker suggests that you manage your money according to the NeFiPELog system, doesn't it merit your attention? If he recommends the system, and he has the results to show for it, shouldn't you do your utmost to follow it? Even if you have $100 only to manage? That would be a measure of your discipline, isn't it?

Money, like everything in life, needs to be managed. If not managed, your money turns into a state of financial chaos. Isn't the global financial chaos a sign that you need to go back to basics?

I wish you Success in your undertakings and Good Health and Wealth to you and your family. Take care!