4 minutes read

Bread money and Seed Money – Financial Principles 101

Vincent Heys

Ah, Pay Day! What a wonderful feeling! The bank account is full, and the month even fuller, with possibilities galore.

Let’s not talk about the arid desert between mid-month and the next pay day. It is limitless in its exasperation. You spend hours dawdling on the couch because it costs money to go anywhere, do anything.

Your monthly travels don’t have to only be from the paradise of Pay Day to the monotony of Month End!

You can start to live beyond the litany of pay day perils and flourish financially. All it takes is some real-world commitment and foundations set for the future. You don’t have to change everything overnight, or radically change your everyday living to achieve financial wellness. Well, maybe some of us DO need to change everything. But the rest of us need only make simple tweaks.

Getting your financial principles right

Ultimately, striding towards financial wellness starts (and dare we say, ends) with laying the right foundations with financial principles that have stood the test of time. If you don’t understand the basics of money, how you view it, spend it, and save it – the actionable steps of saving, spending and preparing for the future seem impossible.

You can catch a synopsis of our most valuable financial principles here or here. Read on for an in-depth look at how to end your perilous pay-day cycle by sorting your income into two neat, easily dividable categories.

All of the money that comes into your bank account can be placed in two buckets: Seed Money and Bread Money. By separating and categorizing your money like this you can give every dollar a purpose and make sure it is serving you and your family for dinner tonight, and life a thousand nights from now too.

Seed Money

Think of your Seed Money as any finances you put towards the future. This could be savings, investments, a retirement annuity, a mortgage on an appreciating house and more. It is money that you are sowing today so that you can reap a harvest in the future.

Seed Money is how you build generational wealth, and how you set yourself up to live the life you want when you’re not working or when your grandchildren want a treehouse installed in the back yard. It’s investing in assets today, no matter how small the contribution, so that tomorrow you can reap the harvest and live off of that income.

For example, you might put your Seed Money towards investing in, buying, or starting a business that may not make any money right now, but in the (near or far) future, will bring in income you need. Or perhaps it is choosing to take a dividend, unexpected income, or your monthly Child Benefit Payment and stash it in a good investment rather than adding it to the “bottomless pit” of your monthly expenses. You could put that Child Benefit Payment into an RESP (which is like a College Fund for your child) and sow it today, so that you can reap the harvest when your child goes to college, and you have to pay hefty tuition fees.

Bread Money

Bread Money is the other bucket and it’s the one from which you live, day to day. This Bread Money is the finances you need to live and cover your expenses. It is things like groceries, entertainment, travel, rental, car expenses, eating out, insurance, medical expenses…. You get the point.

It’s important to know how and what you’re spending your Bread Money on – don’t let it be an unchecked bucket with a hole in the bottom. Rather start here and decipher your values, hopes, goals and dreams to set your spending on the right track with the right motivations.

In case you were wondering, you can’t plant bread in the ground and hope for a harvest in the future. You’ll need to plant seed for that. So don’t get the two categories confused. Be mindful about what you’re spending your Bread Money on and make sure you’re happy with it. Don’t allow guilt or FOMO or worry to side-track you from your carefully aligned budget. You don’t need to plant your bread. But you DO need to plant seed. This means that you need to set aside designated funds for sowing, to reap a future harvest. Go full “Farmer” on the situation and water and pamper your seed so that you can guarantee a bountiful harvest. Meaning you should invest wisely, track your growth, and prudently add to your investments as often as you can.

If you’re ready to start tracking the growth of your harvest and understanding your financial wellness a whole lot better, why not create your Dashboard for free here. You can create a picture of your assets, goals, and financial growth to keep you accountable and moving forward year on year. This kind of motivation will keep you from blowing your Pay Day joy in the first half of the month and keep you focused as you make sound financial decisions for yourself, your family, and your future.

Topics:Personal Finance

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