David Allen in “Getting Things Done” compares productivity to the martial arts. He gives instruction on how to become a black belt in your personal productivity with a “mind like water” that allows you to handle anything that comes your way with a balanced response. When a stone is thrown into a pond, the water reacts with perfect balance. It reacts just enough to disperse the energy, no more, and then returns to a calm state. It doesn’t over or under react.

Becoming a black belt and having a “mind like water” in your personal finances is very similar. It means you can take whatever is thrown at you without knocking your finances out of control. You can respond to any situation with perfect balance. Unexpected events or changes in your finances, good or bad, can be handled with optimum efficiency, and little or no stress. It means you can direct the flow of money where you need it almost effortlessly.

In an effort to help people gauge where they are in their personal finance development, I’ve defined what people at the various “belts” might look like. Where are you?

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For the next 2 or 3 posts, I will be addressing questions that have come up over the last few weeks. After posting the article about creating and managing a short-term emergency fund, I received the following question:

I was wondering if you could mention some practical ways of building a STEF; any advice would help, especially for those on irregular incomes.

There’s really no trick to building an STEF. It’s mostly a matter of focus and making it a priority. That being said, here are some ideas to help get you started.
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Since I wrote my post about “How to create a zero-based budget,” I’ve had a lot of feedback asking how to budget if you’re self-employed or your income is irregular or unpredicitble. For the most part, the process is the same regardless or how regular or irregular your income streams are. However, there are a few tips that will help take the bumps out of budgeting an unpredictable income and may even make budgeting a pleasant experience.

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In my previous post “How to create a zero-based budget” I addressed the basic steps for starting the budgeting process, but I didn’t talk much about how to prioritize your allocations. Most financial planners agree that having an emergency fund is the first step in a sound financial plan. If used properly, an emergency fund can act like a shock absorber for financial bumps and pot-holes. Rather than letting these events throw your budget off course, you can take them in stride. A short-term emergency fund will help eliminate anxiety about having enough money in your account or the timing of inflows and outflows. The goal is maximum peace and control with minimum effort.

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