4 Basic Steps to Handling Money

Four Basic Steps to Handling Money

Share this article with your children.  These basic principles can lay a foundation for future lessons.

One of the biggest factors in our lives is how we treat money. My kids have heard me say money isn’t the root of all evil; the love of money is the root of all evil. I’m pretty sure that was quoted in a popular book somewhere. Money is a tool. Just like a hammer or a saw, it can be used to build a house or it could be used to cut a hole in your parents bathroom door (not recommended). I hope this article gives you a general philosophical overview of how we should view money. Also, it gives some practical advise for how to approach the monetary part of our lives.

I basically boil my life philosophy on how to manage money into three parts, 1. Give, 2. Save, 3. Spend. I write them down in that order for a reason. You should approach your finances in that state of mind and in that priority.


4 basic steps to handling moneyThere is something about giving of your abundance. Whether it is time, or material goods, or kindness or money, we can give those things. I think the main reason giving really works is it helps us understand that  money running through our accounts isn’t really ours to begin with. When you realize that you leave this world with the exact same amount of money that you came into this world it puts the whole process of gaining and distributing money in perspective.

When we give something of ourselves, in the form of money, we see that we aren’t really a pot that is filled, but a pipe that funnels funds to different purposes. We live in a part of the world and a part of time where even those considered to be impoverished in this country have advanced technology that even the U.S. president didn’t have 30 years ago (cell phones and flat screen televisions). Regardless of how much money we have coming in each week and in our bank accounts, we can do something to give of ourselves with a portion of that.

How much should I give? 


Great question!

I don’t know the right answer for this every time but as a general rule I would say to give to the extent it is a bit uncomfortable. In fact this is a great general rule for life. As we extend ourselves a bit outside our comfort zones, this shows us that we can tolerate to be outside our comfort zones and this promotes growth! Growth is uncomfortable, but without growth we are stagnant. Stagnant ponds are disgusting. Don’t let yourself become disgusting. It might be 10% of your weekly income. It might be 90 percent!

The point is give. Find something you believe in and give to further that belief. I’ve always found it easiest to give to the thing that I feel is the most important in my life and everyone around me. I feel there is a responsibility to know what you are giving to just like there is a responsibility to be intentional with all your endeavors. Don’t give impulsively.  Feel strong about what you are giving to and if you share money or time with another person (namely your spouse), be in agreement with where you decide to apply your money.


4 basic steps to handling money
You won’t come out ahead if saving isn’t a part of your monetary plan. When it comes to saving I have found that paying myself first is the most productive way to save a great deal. If I have a goal to save a certain percentage or certain numerical value of my income, after giving. the first part coming out of my earnings is the payment I owe myself. I put saving is a separate account. It may be a brokerage account, a savings account or wherever, but it stays there. I only move it for further investing or an emergency.



This is the fun part, maybe, depends on how you look at money. The most important decision you can make is to look at money like a tool. This spend part of your tool gets you to the places you want to go. You spend money on groceries because you don’t want to go hungry. You spend money on electricity because you don’t want to be hot during the summer or cold during the winter.

4 basic steps to handling moneyEverything in this category needs to have a purpose. It might be something as trivial as setting aside $10 every month to buy someone else’s coffee, but it should have a purpose. This is where a budget comes in. If you love checking boxes on a budget and want to set aside $10 for coffee and $40 for books, that is great. More power to you, but I don’t think you have to be that regimented. The spend category will ebb and flow depending on your stage of life that week, month or year. If you are taking care of the first two parts, you can adjust your spending categories as necessary. Just be sure you are saving and giving before you look at what you can spend.  If you have to eliminate parts of spending, so be it.

Put aside the money for the things you can’t live without. Set aside a portion for discretionary spending. Save for future events. Sometime your car will break. Sometime you will want to go on a vacation. You’ll probably want to go out to eat or see a movie. These are all great things, but self-control is important and put money aside for the future.

No Debt

When you are first starting as an adult, strive more than anything to not take on debt! Just make it a iron clad rule. This can be like the rule I have about not jumping off the Empire State Building or the rule I have about not swimming with sharks. Just don’t do it! We will talk about debt and how it is used in the world in other posts. For now, don’t go into debt!


I will get more specific about finances and how I approach handling money in future articles but these are the basics. What is your general philosophy on handing money? Do you identify each dollar as you receive it? Is there anything else basic that you teach your children. Comment Below.

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Tom is a doctor, husband and father of five with a passion for parenting and finance. When he isn't skateboarding, riding BMX, or jumping on the trampoline with his kids, he is reading and writing about personal finance. He helps high income parents educate and mentor their kids to become financially, emotionally, and intellectually self sufficient.

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