Its working - I GOT ALL THIS MONEY BUT WHERE DO I PUT IT?!
Isn't this a great problem to have? You are getting money from cutting grass and washing cars, while people are working for you and bringing you recyclable items!
Let's say the following information is for a month of work:
You wash 10 cars at $5 each = $50
You cut/clean 5 yards at $10 = $50
You get $25/week for recyclables = $100
Total income revenue: $200!
Now we apply the 10/20/70 rule to separate the money.
$200 x .70 = $140 (Investing)
$200 x .20 = $40 (Emergency Fund)
$200 x .10 = $20 (Spending Fund)
You now have $140 to reinvest into your business! First, remove 20% out of the $140 (140 x .20 = $28), as that will be used in the future, so set it aside for now. I suggest you purchase a small safe box for your business "petty cash" and keep it at your home. This is where you will place the $28. Put the $28 in an envelope labeled "Stock Market Funds" and locked it up.
You now need to open up a bank account! Ask your guardian, parent or mentor to help you do this as you will need their signature. Once you set up your bank account, and have your debit card, deposit the remaining $112 into your bank account for future business purchases that require a debit card. You will also need a bank account for future steps like, establishing credit and stock market transfers.
Your $40 emergency fund will also be placed in an envelope labeled "Emergency Fund" and placed in your small safe box. Remember, these funds are not for impulse buys or junk. These funds are for items you might need for school, the business or help the family in case of an emergency. Also, you will be driving soon, so you need to save up for your vehicle - RIGHT?!
Your $20 spending money! It might seem too little but remember, this will help you learn how to "live within your means". If you only have $20, then you shall only spend $20. Trust me... as time goes on, this spending fun will increase!
Now repeat this for another three months and we will come back to where you are then and I'll show you how to start investing in the stock market and establishing your credit!
P.S. - Someone asked me how they could keep track of the recyclables they buy from other people, so I posted a receipt book I would use.