Channeling Money for an Intentional Life

Posted On 4 April 2022

Last updated on April 10th, 2024

Water and money are two very powerful resources that have huge impacts on human life. When we learn to manage water and channel, or direct it, we can turn a desert into productive farmland. Channeling money can convert a life of living paycheck to paycheck into a life of abundance, choices, and the ability to live life on your terms.

My wife and I lived in Idaho Falls, Idaho for about 6 years in the early 2000’s. The area has an amazing canal system that was built in the late 1800’s. When it was completed in June of 1895, it was the world’s largest irrigation canal in the world and converted tens of thousands of acres of desert into productive farmland.

There is a lot of talk in the world of personal finance around the topic of saving money. Banks offer us savings accounts. People talk about their savings rate. While saving money is a good thing to do, is there another way we should look at handling our money?

Saving Money with Sales

Do sale prices really save us money? We are told so. Let’s take a look. There are a few things that can happen when we buy items that are on sale.

A common thing that happens (at least to me!) when there is a really good sale price is that I tend to by more of that product to take advantage of the sale. So, if something is on sale for half price I tend to get two of them. Yes, my purchasing power has increased, but I did not “save” that extra money. We do maintain a full pantry, so this tendency is included as part of our financial plan.

Sometimes a product is on sale and the price is good, so we buy it. The challenge is that we don’t necessarily need that item and it was not something we were planning on purchasing! Yes, we got a good deal, but we spent more than we were intending to spend. That is not really saving money.

Maybe other people have walked out of a store proud of themselves for spending less than they were intending to spend. That is generally not my experience – especially at the grocery store! For those of you that do have “unspent dollars”, do you then transfer them to your savings account? That would be a smart thing to do. If you actually do that, I salute you!

Dam The Cash Flow

So, we know that wealth is built by spending less than we make. Most people probably have a savings account. The trick is how to get that balance to grow on a regular basis. The point of the savings account is to accumulate money that you can both solve problems and take advantage of opportunities when they come along.

Like with managing water, we need to channel our money. This often starts with building a dam to slow down our cash flow. Here are some strategies to channel money, slow the cash flow, and build wealth.

1. Pay Yourself First

This is the very best way to save money! If we try to save what is left over after we are done spending our money, we often find that we don’t have anything left to save. A dam does not stop the flow of money, it slows the flow and allows people to get more use from that water – be it the reservoir used to for water storage and recreation, crop irrigation, or energy creation.

Unlike businesses, people have wants and desires. We see cool things we want to have. These are why we tend to spend all our money. Cyril Parkinson wrote a law that can be used to explain this.

Parkinson’s Law was first written in 1955 and was humorously written about work. The law states that a project will expand to the time allowed to complete it. While more of an adage than a serious law, I think that Parkinson’s Law applies to finances as well – our expenses will rise to match our income!

We need to outsmart ourselves. That is why we need to build a dam for our finances. When we channel our money in different directions, we get better results.

2. Set up Auto transfers

I must admit that I am excellent at forgetting things. For those of you out there that have great intentions to do things, but something happens, here is a little hack for you … set up automatic transfers!

We can go to our online banking and set up recurring transfers from our checking account to our savings account. Set it and forget it! What a great way to divert our money.

3. Round into savings

I got started with an app that rounded up and saved the cents from each transaction. The problem I had with that app was that they charged a monthly fee. While the fee was only a few dollars, it did not make sense for me to continue.

There are some bank accounts that will allow you to round your expenses and put that money into your savings account. Best part is that it is free!

Rounding may sound small. When applied to many transactions over time it can add up. This can be an easy way to channel some “extra” money into your savings account.

4. Prioritize Important Purchases

In the Book The Seven Habits of Highly Successful People Stephen Covey shared the concept of “Big Rocks”. A man was giving a lecture to a group of people. As he stood at the table in the front of the group, he pulled out a one-gallon, large-mouth jar. Then, he pulled out a box with baseball sized rocks and proceeded to put the as many rocks as he could into the jar.

He asked the group if the jar was full. Everyone said, “Yes!”

Without hesitating, he reached under the table and produced a bucket of gravel. He then poured the gravel into the jar. Then, after giving the jar a bit of a shake, he topped it off with more gravel.

He asked the group if the jar was full. This time there was some hesitation amongst the group, although many said, “Yes.”

Reaching under the table again he produced a bag of sand. He poured the sand into the jar, shook the jar and then topped it off again.

Again, he asked the group if the jar was full. The group was not sure at this point. So, he reached under the table and poured a jug of water into the jar until the jar was full. Then, he said, “Now the jar is full!”

The moral of the story he was teaching was that if he had not put the big rocks in the jar first, they would never fit. We can apply this to many things in life – time, money, or even packing for a trip. Since we are going to spend our money anyway, we need to channel it to where we want it to go.

When we pay for the things with the highest priority we are taking care of our responsibilities. By the time we get to discretionary spending we can simply not buy it if we don’t have the money for it. I know that my sound tough. That’s because it is tough – and it’s supposed to be. The good news is that we don’t only have the option of denying ourselves. We can put pressure on ourselves to earn more!

5. Buy Assets

As Robert Kiyosaki talks about in his book, Rich Dad, Poor Dad, we need to focus on buying assets. He likes real estate. There are so many different things we can buy that either pay us, hold value, or increase in value. Instead of just eating at McDonald’s, why not buy some stock in McDonald’s?

I wrote about assets previously. We can also invest in our own toolbox – whether that is learning a skill or actual tools you can touch. Investing in ourselves can be the best investment we can make.

Summary

We are going to spend our money. The question is where and how are we going to spend our money. If we want to be in control of our money we must take the steps to divert our money.

Channeling money can be like handling water – we can cup our hands together the best we can, but the water will leak out. When we used better technology (like a cup for water or a savings account for money) we get better results.