Let’s Get into the Numbers- Quick and Dirty

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How many of us avoid dealing with an issue because it seems overwhelming?

A lot of people have told me that they don’t open their mail because they are afraid of what they will find. Doesn’t really make the problem go away though, does it? It can actually make it worse.

If you are in a tough situation financially where you don’t want to login to your bank account or open your mail, you have two options that will help you get a handle on the situation.

• A. Stay where you’ve been and let it get worse.

• B. Take Action with a piece of paper and your phone calculator or an Excel spreadsheet.

If you are willing to try ‘B’ then allow yourself to break out the next steps into small, achievable pieces. These steps will give you visibility and a starting point.

These steps assume you have a computer. If you don’t you can still do the same activity with paper, pencil and calculator.

1.  Login to online banking. (Don’t have online banking set up yet, then that becomes Step 1 or find your most recent bank statement…in the mail that you haven’t opened.)
2. Print out Account Activity for the last month in your checking account or have your bank statement in front of you. Make sure you have at least one full month so that repeat expenses are obvious.
3. Make a spreadsheet/column list and list all of the income/spending in their respective column.
   • A = Income- All sources and amount of net income.
   • B = Flexible Expense- Discretionary Spending (Clothes, Eating out, Going out, credit card bills, etc.)
   • C =Mandatory Expense (Rent/mortgage, Utilities, Food, Insurance, Car Payment, Insurance, Child Support, etc.)
4. Sum each of the columns.
   1. IF Column A is greater than B+C, off to a good start. Further analysis is warranted for best budget/savings/spending scenario.
   2. IF Column A is greater than Column C, but not greater than B+C, this can be manageable, behavior changes will be needed. This is a Lifestyle Spending Issue.
   3. IF Column A is less than Column C, you have an Income Shortage that needs to be addressed quickly with a side hustle, second job or evaluating how to reduce mandatory expenses.
   4. If Column B is greater than Columns A or A+C, there is a Deficit Spending Issue. Behavioral changes will be required quickly to help stop the problem.

Next Steps- In future posts we will cover how to address each of the above scenarios.

(Note: Since most people get paid twice a month or bi-weekly (every other week) you usually have one pay period where Mandatory Expenses seem to take up a lot of the paycheck and the other one might be less heavily weighted to Mandatory. Need to balance the expenses to a more even flow; this is where Cash for Groceries becomes a helpful tool.)