Too Much Month…Not Enough Money

by Dennis Perry on September 26, 2011

I recently received a very interesting question in reference to having an Emergency Savings account.  The question was, “What would your advice be to those who lost everything and are struggling to just make ends meet? Putting away savings for a rainy day is important but, how do people who are living on more month than there is money reallocate their budgets?”

I feel the question warrants its own article.  This is a problem shared, unfortunately by too many people.  For the past couple of decades, with easy credit, great marketing, and the emerging of a general attitude of “I want it and I want it right now”, the problem of too much month and not enough money has become an epidemic.

Though it can be difficult to overcome, it is certainly not impossible.  In this article, I will discuss the steps to begin the process of getting this beast under control.

It is important to note, as the Rich Life Coach, I am not about scarcity and sacrifice.  I am a firm believer that we need to use our resources and enjoy our lives to the fullest.  If you enjoy that Grande-3 Pump-Toffee Nut-Extra-Hot Latte from Starbucks (my favorite) then you should have it.  But, there are times when tough decisions have to be made and, at least temporarily, you need to stop what you are doing, re-evaluate your options and change directions.  Someone once said that the definition of insanity is doing the same thing over and over expecting different results.  It just doesn’t happen that way.

With that as background, let’s discuss the steps to get control and begin setting aside money for the emergency savings account.

The first step is getting a very clear handle on just exactly what your monthly cash flow is.  How much is coming in, how much is going out, and where it’s going.  The best way to do that is by tracking all of your income from all sources and all of your expenses for the month.

I strongly suggest that you be very detailed in both revenue (inflow) and expenses (outflow).  Get receipts for EVERY purchase, even small cash purchases.  I use a 3X5 index card, one for each day, and simply write down everything that comes in each day, and everything that goes out.  Keep the cards handy and at the end of the day, week, or month simply total them up.  You can use a spreadsheet if you wish.  If you like financial software, QuickBooks is a wonderful but slightly complicated tool to help you with this as well.  Its more user friendly cousin, Quicken, is another good tool.

The second step is to take a good inventory of your assets and your liabilities.  Assets are the things you own that have value and liabilities are what you owe to other people.  That is a very simplified definition and we will discuss these in much more detail in a later article.  Write them down on paper or use a spreadsheet but do the best you can to make a complete list of what you own and what you owe.  The more detail the better.

Be sure to put realistic values on your assets.  Most of us will assign an emotional value to our “things” but that is not necessarily what we could sell them for if needed.  Try to determine what the true market value is and use that number.

In step 3 you need to analyze the data you have been collecting.  At the end of each month grab your reports and do just a little simple math.  For your cash flow or profit and loss statement, take the total value of all your revenue for the month and subtract the total of all your expenses.  That number is you profit (or loss) for the month.  It is your cash flow for the period.

Next, look at the list of assets and liabilities and total those up.  Subtract your liabilities from your assets and that is your current net worth.  An interesting number to be sure but not all that important in the over-all plan for a rich life.

Step 4 is the hard part.  You need to look carefully at your monthly income and expenses.  Are there things you are spending money on each month that can be put on hold for awhile or stopped all together?  Is there money being wasted?  Do you really need 875 HD channels and all the premium movie channels?  Can you free up at least a little money each month to re-direct into an area that will serve you much better?

Look at your list of assets and liabilities.  Are there any items that you are really not using that could be sold?  EBay and Craig’s List are excellent for this.  Are there any liabilities that can simply be paid off and eliminated or refinanced to give better cash flow?

To increase net cash flow, you either have to increase revenue, decrease expenses, or both.  Take a close and critical look at your numbers and see where you can make changes.  Remember, this is a temporary measure just until you get stabilized.

Understand these steps, though easy to explain, can be difficult to initiate.  Coaching can be of tremendous value in this area.  If you would like more information on our coaching and mentoring services feel free to contact me.

I realize that this article seems to be written from a “Scarcity” perspective but it addresses the question directly.  The better question to ask once you are stabilized is not “What can I give up to save money” but rather, “What can I do to generate more revenue?”  We’ll address this issue in a future article.

Have a great day and make it a rich life.


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Andrew Miner September 28, 2011 at 2:38 am

Great and informative Useful article on budgeting and climbing out of the Debt pit. This is very practical advice that anyone can implement now!


Clare Delaney September 27, 2011 at 2:52 pm

Great steps – they should teach this in school and make the kids practice it with their pocket money, so it becomes a normal habit!

Are you getting enough?

Internet Personals Ads Writing Expert September 27, 2011 at 1:57 pm

Hi Wealth Doctor,

Excellent reminder to look at not only what we really need (it’s actually a shorter list than we realize), but that wouldn’t be living a rich and abundant life, now would it? To only meet our essential needs. Looking at what each of us individually WANTS as well, so we add enjoyment to our life to weave in richness and responsibility is excellent.

What do you think about GIVING and TITHING? I have a limit for myself. If something doesn’t sell on Craigslist within a certain time frame, I donate it locally to clear out the clutter, increase the flow into my life, and decrease clutter! That is rich living indeed for me! Blesses me and blesses others at the same time = richness.

Happy Dating and Relationships,

April Braswell
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Andrew Miner September 28, 2011 at 2:36 am

Well said April. The more you give, the more you receive.

John Moulder September 27, 2011 at 8:48 am

Budgeting seems such a simple thing to do , and yet most of us just don’t get around to doing it .

Body language insider secrets September 27, 2011 at 2:53 am

Dennis, I like the idea of using 3×5 cards to write down transactions durring the day and then adding them up at the end of the month.
Scott Sylvan Bell
Interpretation of body language
Now go implement!

Annie Born September 27, 2011 at 2:17 am

Dennis, I wish every person could read this vital information!
Finance is supposed to be a large percentage to break up in relationship.
Love the excellent steps!
Looking forward to tomorrow!
Create a great day!
Are You Alive?

Michael D Walker September 27, 2011 at 2:00 am

Excellent advice on how to cut expenses. When you think about it, cable TV is easy to do without especially if you live somewhere with a good library that has DVDs to check out.

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Neil Dhawan September 26, 2011 at 11:26 pm

Great article, Dennis! This is very helpful, not just for people who have more month than money, but just as sound advice that, especially right now, people should understand. I get how you’re saying that it has been written from a “scarcity” view, but, it is a good place to start to, at least, get a grasp on the basics of finance.

Stay Amazing and Do Great Things, Neil

Cherie Miranda September 26, 2011 at 10:49 pm

Very practical advice. I look forward to your post about generating more revenue!

Cherie Miranda

Holistic Health Expert

Alex Arshavskiy September 26, 2011 at 10:21 pm

Great article!
I like your advice to write down everything that comes in each day, and everything that goes out.

Alex Arshavskiy

Rob Malone September 26, 2011 at 9:22 pm

As I read your post it made me think of Chris Gardner whom the movie “The Pursuit of Happiness” was based on. I heard him interviewed about five years ago and he was asked how he kept pressing forward when he was homeless, with a small child, no income, etc. His reponse was that something that he was homeless but he was never hopeless. I agree with you Dennis in that even when it seems all is against you, you have to have a perspective of abundance and know that action, vision, persistance and determination will always pay off.

Body Language September 26, 2011 at 9:17 pm

This post will be bookmarked when I am in college in fallen victim to the higher tuition charges.

Thanks for taking the time to write this, Dennis!

Mark Hogan

Kevin Bettencourt September 26, 2011 at 8:11 pm

I love this article on cash flow. I once had the 875 HD channel thing until I wrote down everything I watched one month. Turns out I only need 10 (to be generous) and would rather have the money.

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The Knowledge Stylist: Music, Photography, Travel, Gadgets and More! September 26, 2011 at 7:47 pm

Very good article. These are simple steps, that if taken, will really go a long way towards helping get a handle on one’s overall financial situation. Understanding where you are at is the starting point to make positive changes.


Eva Palmer September 26, 2011 at 5:53 pm

Today’s blog post was very important to me…
It’s just simple maths, but sometimes we just don’t do it.
I wil be following your next posts carefully!
happy to learn at your site this important ideas and tips.
Thanks Dennis,

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Sonya Lenzo September 26, 2011 at 11:58 am

It is fascinating how that list of things you can’t live without changes over your lifetime! Some things I thought that I had to have were actually making me unhealthy and health is now one of my prized possesions.Play time every day with my cat, time for a walk, time to talk with my friends…these are inexpensive but essential now to my life and health.A computer, a good book, a cuddly cat, a ceiling fan, a few excellent friends, some rice and beans and fresh fruit and vegetables, the sun rise every morning…and good health to enjoy it….it is more than enough for my rich life.
Sonya Lenzo

Dennis Perry September 27, 2011 at 10:58 am

Very well said Sonya. That is the “stuff” that makes up a truly rich life. Good for you!

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