The article today is very short. On purpose. It’s a laughably simple distinction that many people miss when managing their money. And when you get this right, it changes the whole money thing for you. Ready?
There only two types of money:
Money you can spend and money you can’t spend.
That’s it. That’s the whole money game in 15 words.
Most people get this confused. We get a check coming in every week, two weeks, every month. And we are not quite sure what we can spend and what we can’t. That nagging sense of guilt you feel? Yeah, that comes from not being clear on those two numbers. You might be asking yourself: Should I spend this right now? Or is this money I can’t spend right now?
When you know exactly how much you can spend freely, it makes managing your finances very very easy. You have a specific amount in an account somewhere that you know you can spend on whatever you want (Play Money, I call it) and you have a specific amount that you can’t spend. (Because it’s going to other things.)
When you are crystal clear on these two numbers you win the money game.
It’s simple, but not necessarily all that easy to do alone. That’s why sitting down with someone to figure it out all can be really powerful for you.