How to Make Ends Meet

Rather than going into a long explanation here, about how and why everything works (information that may be found in the Appendix), what is important to grasp right now is that eliminating worry and concern over money boils down to strict observance of two fundamental rules:

• Spend Less Than You Earn
• Save In Advance

Financial recovery results not from discussion of concepts, but rather, the skillful use of special tools. So, I'll cut to the chase and introduce the Tools. If you want to know more, feel free to consult the Appendix.

You will be able to make ends meet if you SPEND LESS THAN YOU EARN. There's just no way around that. So, you'll need to know how much you earn, and the tool for that job is:

The INCOME Table

of this particular page 

You'll also need to know how much you spend, and the tools for that job are:

The MONTHLY PAYMENTS Table

of this particular page 

and:

The OCCASIONAL EXPENDITURES Table

of this particular page 

If SPEND LESS THAN YOU EARN is Rule #1, then Rule #2 is SAVE IN ADVANCE (for the expenditures you plan to make - the operative word being "plan", as you will soon see).

Now, long years ago, banks offered what they called a "Christmas Account", a separate savings (sub)account to which you could contribute small amounts of money, at various times throughout the year, and have a lot saved up by the time Christmas rolls around. A variation of this phenomenon is known as the "envelope" system whereby, when you get paid, you divide your earnings among a collection of envelopes, each labeled for a particular Expense Item.

Why Two Expense Tables?

We use two expense tables because there are two expense types, or classes, which must be calulated differently when preparing a Sound Spending Plan (a.k.a. reliable budget).

MONTHLY PAYMENTS

Monthly Payments are payments due on or about the same the same day each month, often for the same amount. Because the amount and due date are known in advance, Monthly Payments are easy to plan for.

OCCASIONAL EXPENDITURES

An Occasional Expenditure is any Expense that is not a Monthly Payment. Occasional Expenditures may be anticipated or unanticipated, occur at random intervals, frequently or infrequently, for large or small amounts not known in advance. For all these reasons, Occasional Expenditures are difficult to plan for, and, in fact, are one of the primary reasons people conclude that budgets don't work.

I've learned that if you stick with something long enough, you'll eventually figure out the best way to do it. And I say, if the banks and credit card companies are willing to do the grunt work, let 'em.

Tell 'em what you're going to say.

Say it.

Tell 'em what you said.