Alright, kids. This is the exciting conclusion to our Knowing Your Numbers series.
In Part 1, I tried to climb inside of your dome and poke around in an effort to get you to frame knowing your numbers in a way that didn't make you want to throw up all over yourself. Part 2 was all about how to breakdown your expenses into different categories to help prioritize expenses. Now Part 3 is the actual nitty gritty of building a spreadsheet to shine a light on what's in the dark.
Here's what you need:
- This Know Your Numbers Worksheet.
- Make a copy of the worksheet and save it to your drive so nobody accidentally overwrites your work.
- Log in to your bank accounts and download your previous statements, so that you can use it as a reference for the worksheet.
- Fill out the worksheet. Follow the instructions on the first page of the worksheet.
Set Aside Some Time
This might take you a bit of time to complete, so make sure you have time blocked off so you can focus. Spend some time figuring out what was actually spent in each category. Start by looking over the last several months or maybe the whole year to come up with a monthly average. Remember, unless you have a good handle on how you spend your money, your projected numbers will be based on your actual numbers, so you want to make sure those numbers are as accurate as possible. Otherwise, you're just pulling numbers out of your ass and it won't be helpful.
Don't Freak Out
If the numbers are way higher than you anticipated, don't freak out. You're already in a much better position now that you know what's up and what needs to change. Remember, the most practical benefit of knowing your numbers is the ability to use that information to change your behavior.
Change Some Shit
If you don't like what you're seeing - perhaps you think some of your expenses are too high or you know can't earn as much as the worksheet tells you that you need - then some shit must change. You can change some of your projections, but realize that when you change the projections, that means in your real life, you need to change your behavior to make that a reality.
Reflect: Is This Realistic?
After you change some shit, reflect and think about how realistic these changes will be. Maybe you make a shit ton of money so it's easy to spend less on gold plated frames of pictures of yourself, or whatever the fuck you're wasting your resources on. Maybe it's more difficult because you need to spend less on brunch and your whole existence is basically brunching, so now you're spiraling into an existential crisis. If that's the case, you need to get real with yourself and figure out how you're going to bridge the gap (and your spending habits don't define who you are as a person - chill, it's only economics).
As your circumstances change, so do your numbers. Revisit this every quarter or every year to see what has changed and to keep yourself on track.
Simple, but Not Easy
The equations on the spreadsheet are really simple. It's basic arithmetic. The totals tell you how much money you need to earn in order to meet the desires that you've quantified and entered into the spreadsheet. If you can't meet that number, you need to figure out how to earn more and/or spend less. It's so very simple, but not easy. But over time it does get easier. It's all a mental game. When you are faced with the decision to live outside of your means, you can use mental tricks to help you reframe the decision in a way that encourages you not to. Ask yourself, what's motivating you to spend when you shouldn't? How will this impact whether or not you can reach your goals? Talk yourself through it and you'll be surprised at how you can help you.
If our worksheet was totally overwhelming, maybe you need our help. You can book a budgeting session with us. We'll do all the heavy data entry and sit with you to help you figure out your projected numbers and maybe make it totally not boring, maybe even, dare I say it, fun.
Keep at it, guys. Hopefully one day artificial intelligence will take over and everything will be automated rendering our entire need to work and earn money totally obsolete. And we'll just spend all day admiring and creating beautiful works of art while robots do all our stupid work for us. But until then, we'll be here to help along the way.