Book Summary: Get good with Money by Tiffany Aliche

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Get good with money is about managing money. It is about how to manage and track the money you’ve earned. The key to being wealthy is having a good money management system. You need to keep track of where every penny is coming from and going.

But, how do you start the process?

To answer the question, Let’s look at some of the big ideas in the book.

The Big ideas are

Knowing your current financial health
Controlling expenses
Separating your accounts
Having a Money Management System, and
Improving your credit score

Let’s start with knowing your current financial health.

“There is a magic about money…When money is not planned for, tracked, and kept record of, it literally disappears, like magic”
Tiffany The Budgetnista Aliche

To enable you to ascertain your current financial health, you need to generate two types of lists.

A money-in list and a money-out list.

The money-in list comprises all your expected income including monthly salary, side hustles, and any income that comes into your life and yes it includes all unexpected money.
The money-out list comprises all of your expenses including Utilities, Subscription, grocery, and that’s basically, anything and everything that comes out of your income.
It’s now time to add and subtract. You want to add up all the items in the money-in list and subtract them from the money-out list.

The figure you get positive, or negative is your current financial health.

You will then want to sum up all the items and subtract the money-in list from the money-out list. The figure you get positive, or negative is your current financial health.

Controlling Expenses

The next big idea is controlling your expenses. It is time to take control.
You want to categorize your expenses into the following:

Bills [Rent, Mortgage, Insurance, etc.]
Utility Bills [phone, water, Electricity] and
Cash Expenses [Everything else]

If Bills and Utility Bills are high, you have an I don’t-make-enough-money issue.
If your Cash Expenses are higher, you have a spending-too-much-money issue.

The level of control on your expenses moves from high to low from the Bills to Cash Expenses. If you want to cut back, you would want to start with your Cash Expenses.

Separating Your Accounts

The next big idea is separating your accounts. Every dollar you earn must have a meaningful purpose.. You must have 5 separate accounts to manage your money.

These are

2 Checking (current) and
2 Savings and
a Cash account

These will be your

Deposit,
Bills,
Emergency Fund,
Long Term Savings,
and Cash Accounts

You want all your money coming into your deposit account and Transfers are made to all the various accounts.

Money Management System

Let’s look at an example of a monthly money management system you can adopt. You want to

Prepare your budget before the next month starts
Transfers all income into the Deposit account
Transfer Monthly Savings to the long-term savings account.
Monthly Emergency Savings in your Emergency Fund Account.
All Bills payments are transferred to the Bills Account
Monthly Expenses and Allowance are transferred into the cash account
There should be nothing left in your Deposit account after the process is finished.

You must build an Emergency fund account of about 3 -12 months based on your Monthly Expenses. The number of months you choose depends on the uncertainty surrounding your employment.
All Unexpected Money [UM] is directly deposited in the Long-term Savings Account.

Improving your credit score

Finally, let’s discuss improving your Credit score. To start, let’s find out what we mean by a credit score?

Your credit score isn’t a grade on how well you manage your money. It is a score that reflects how well you use other people’s money.

A higher credit score means that you are considered a lower-risk borrower who is likely to repay debt. A low credit score means that you are a higher-risk borrower who may not be able to repay debt.

Next, who are the main players involved in your credit rating?

There are three main players involved in your credit rating:

Your credit report
Your credit score
The credit bureaus

Your credit report is the history of all transactions you have engaged in.
Your credit score is your score over a period.
The credit bureaus are the people who collect information about you. The information is to generate your transaction history and records.

How do you improve your credit score?

Here are the steps to follow:

Set up a credit card for this sole purpose
Put a small monthly debit such as Netflix, Apple News subscription on it
Set up a Direct debit to pay it off before or at the due date but not before the statement date. [we want the credit bureau to know about it]
Make sure to Automate the process and
Leave your credit score to build within 6-12 months

Simply put, automate the payment of a small monthly debt on your credit card and be patient.

You make it automatic to pay off a small debt monthly on your credit card. The following are the steps to follow:

Set up a credit card for this sole purpose
Put a small debit on it. Netflix, Apple News, etc.
Direct debit to pay it off before or at the due date but not before the statement date. [we want the credit bureau to know about it]
Automate it
Leave your credit score to build within 6-12 months

My Take

Get good with has made me…well quite good with money. The separation of accounts and giving every penny a meaningful purpose was groundbreaking to me. Seeing money in that way has improved my finances in so many ways. To wrap up, develop a money management system to track your money. It is the only way to build wealth and financial reserves.