The magic of the number 3

The magic of the number 3.

I am a massive procrastinator and with a to do list (home, life admin, work, business etc) as long as my arm this is not great.

Someone at work once told me that focus on 3 things I want to get done in the next hour. This has made me think about the number 3 and how its actually a good number. It is planning to do enough that you feel like you have achieved but also not too much that it feels overwhelming.

I have also been trying to get into changing habits and it is really helping.

I read in the decluttering book – every time you are in a room which feels a bit overwhelming remove 3 things that doesn’t belong there.

Since moving last year there are some boxes in multiple places that I haven’t touched and have been putting it off. I gave myself a challenge yesterday to fill 3 black bin bags. I felt great when I managed it.

Last week I did a carboot and decided to do another one this week, and I love it – clearing out and making some money at the same time. Guess what? I am going to go again for the 3rd time next week. It is a habit now. It's an early one so I still had the rest of the day! This week it was the first time I had done it with the girls but they were great and got into it.

So the number 3 is quickly becoming my favourite number.. and I am using it in my personal finances too. I have 3 sinking funds (or pots as I like to call them) as any more is overwhelming to me, Christmas pot, House renovations pot, and Holiday pot (which the carboot money is going into – hopefully my 3rd will get over the £100 mark.)

How else can the magic of number 3 help us with our finances – is 3 bank accounts a good number to help us manage? for example

Can this little number help us revolutionise the way we manage and grow our money

I have thought about 3 (obviously) areas where the number 3 can help us with our finances;

1. The magical budgeting 3: Income, Expenses, Savings

At the core of financial stability lies the holy trinity of budgeting: income, expenses, and savings. By dividing your finances into these three essential categories, you gain clarity and control over your money.

Income: The first step is to accurately assess your income streams, whether it's your salary, freelance earnings, or passive income from investments. Understanding how much money you have coming in is crucial for effective financial planning.

Expenses: Next comes the task of tracking and categorizing your expenses. Divide them into three main buckets: needs, wants, and savings. Needs encompass essential expenses like housing, food, and utilities. Wants include discretionary spending on non-essential items like dining out and entertainment. Savings represent the portion of your income you set aside for future goals and emergencies.

Savings: Here's where the magic of three truly shines. Aim to allocate at least one-third of your income towards savings. This ensures that you're not only covering your immediate needs but also building a financial cushion for the future. Divide your savings further into short-term (emergency fund), medium-term (for goals like vacations or buying a car), and long-term (retirement savings).

2. The Rule of Three in Investing

When it comes to investing, adhering to the rule of three can simplify decision-making and reduce risk.

Diversification: Spread your investments across three main asset classes: stocks, bonds, and real estate. Each asset class offers unique risk and return characteristics, helping to mitigate the impact of volatility in any single market.

Risk Management: Apply the rule of three to your investment portfolio by diversifying within each asset class. For stocks, consider allocating your funds across large-cap, mid-cap, and small-cap companies. In bonds, diversify between government bonds, corporate bonds, and municipal bonds. And in real estate, diversify geographically and across different types of properties.

Time Horizon: When planning for your financial future, adopt a three-tiered approach to your investment time horizon: short-term (0-3 years), medium-term (3-10 years), and long-term (10+ years). Align your investment strategy with each time horizon to match your goals and risk tolerance.

3. Debt Management – The Triple-A Approach

Debt can be a double-edged sword, either propelling you forward or dragging you down. Employing the triple-A approach to debt management can help you conquer debt and pave the way to financial freedom.

Assessment: Start by assessing your debts, categorizing them based on interest rates and terms. Focus on paying off high-interest debts first, such as credit card balances, while making minimum payments on lower-interest debts like student loans or mortgages.

Action: Implement a three-pronged strategy to tackle your debt: budgeting, increasing income, and reducing expenses. By allocating more funds towards debt repayment while simultaneously cutting back on discretionary spending and finding ways to boost your income, you'll accelerate your journey towards debt freedom.

Automation: Finally, automate your debt payments to ensure consistency and avoid late fees. Set up automatic transfers or payments to allocate a portion of your income towards debt repayment each month, making it easier to stay on track and resist the temptation to spend impulsively.

I am slightly obsessed with the number 3 now – I think I might research it a bit more – but it is working for me in my life so I am not stopping

Laura and Nicola x