The Seven Prosperous Accounts

Bakari Akil II
2001

A few years ago, in a book entitled "Money is My Friend" by Phil Laut, I encountered an interesting philosophy concerning money and how you can use it to your advantage instead of allowing it to slip through your fingers. The entire principle behind the idea was to change your outlook concerning wealth and its availability.

One of the ideas that caught my attention immediately concerned the saving of money. Under the Saving Law, Laut suggested creating seven accounts which could help you reach your financial goals. However, not in the usual sense. Average checking and saving accounts just won't do.

The plan called for starting the following seven accounts:

• Cash Flow Savings Account
• Large Purchases Savings Account
• Financial Independence Savings Account
• Millionaire's Savings Account
• Annual Income Savings Account
• Taxes Savings Account
• Generosity Savings Account

Before we go on, this plan can be used by anyone at any income level. If an individual does not have enough money to start each account, improvise. Glass jars can be used, envelopes, a safety deposit box, etc, until enough is obtained to start the individual accounts. It must be said that the most important thing involved in saving is not the amount, but the practice of saving. By creating the habit as your income increases, the habit ensures that you will always have excess and abundance. More so than having no stated objective for income that is just saved indiscriminately.

Now, the purpose of the Cash Flow Savings Account is to stem the continuous draining of a checking account. Laut suggested depositing your entire paycheck or income into the Cash Flow Savings account. After depositing your total income into this account, take out what you need to place into your regular checking account for bills or for the other six accounts. The goal is to make sure that the money you remove is less than the money you place in the account. By doing this it is a guarantee that the amount will continue to expand.

The next account is the Large Purchases Savings Account. This is for the express purpose of buying items that you wish to have. Laut suggests that the entire reason for this account is to maintain the balance at zero. He also draws parallels between this account and regular checking accounts. People often spend money from checking accounts and feel guilty, but with this account its sole purpose is to be spent.

Now here's one of the heavyweight accounts, the Financial Independence Savings Account. This account is to provide you with the income that allows you to spend your time how you wish to spend it and without anyone controlling if you work for a living or what line of work you wish to participate in. Laut has two rules for this account:

1. Never spend the principal
2. Spend the interest regularly (however you wish, you can even reinvest it)

By spending the principal you lose the degree of financial independence you have obtained. When you spend the interest it allows you to gain a glimpse of what your efforts can create. How much you contribute to this account heavily determines how soon you can achieve financial independence.

The Millionaire's Saving Account is the other Heavyweight of the seven savings accounts. The rule of this account is simple. The money in this account can only be used for investments that will bring you income. By using this account wisely you can always have funds to invest in money making ventures. This can boost your income and contribute to your financial freedom.

The Annual Income Savings Account is special because it provides something that we all need: Time Off. Laut suggests this especially for those who are self employed and and have no vacation plan ingrained into their business. He suggests building this account by placing ten percent of your income in the account and once a month taking ten percent from the account and using it for a vacation until you have a years salary saved up. Or, saving two days salary in the account and taking a day off or saving two weeks salary and taking one week off, etc., until you have a years salary.

Next, we have the Tax Savings Account. This account is used to offset any taxes you may owe at the end of the year or if you are self employed and have to pay your own taxes. This keeps you from being caught by surprise at the end of the year or by a sudden audit.

Finally, we have the Generosity Savings Account. With this account donations and gifts to your favorite people and organizations can be made freely, without feeling that you are spending money that should be used for other important obligations.

By learning how to use your money specifically for the purpose of improving your finances, it takes the guesswork out of establishing financial independence for you and your family. It is not a cure all because the search for ways of improving and expanding one's resources will always continue. However, it does accomplish an even more important habit, which is the habit of action. In addition, as you continue you will notice that you will start to look for better ways of achieving your goal.

Much Success!!

Reference
Laut, Phil, Money is My Friend, Eliminate your Financial Fears and Take Your First Steps to Financial Freedom, Ballantine Publishing Group, New York, 1989.

E-mail comments to Global Black News