“It’s easy to meet expenses, everywhere we go, there they are.”
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 thousands of nights thereafter.
Let’s start with your Pay Day. What a wonderful feeling. The bank account is full, and the month even fuller, with possibilities galore. However, the euphoria soon gives way to the monotony of Month End.
Understanding the principles of bread money and seed money will help you flourish beyond the short-lived excitement of payday. It’s also the key to financial wellness.
Bread is something you eat. Bread Money is the bucket from which you live, day to day. It covers your expenses like mortgage, groceries, entertainment, travel, car expenses, eating out, insurance, medical expenses, and other essentials.
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. You must stay mindful about what you’re spending your Bread Money on, and create a Dashboard to keep you accountable.
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 the seed for that.
Seed money, on the other hand, is what you sow. It is designed to go into the ground and produce a harvest at a future time. 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 backyard. 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.
Financial wellness for life
Ultimately, achieving financial wellness starts (and dare we say, ends) with laying the right foundation that can stand the test of time. You can find some of these valuable financial principles here or here.
It is mission-critical to understand the basics of money, how you view it, spend it, and save it – and of course the timeless principle of bread money and seed money.
By Vincent Heys Co-Founder & CEO Wealthstack Financial Wellness