Where did my money go?

“ I have no idea where my money went this month.”  “I  use credit cards to avoid bouncing checks between pay periods. ”   “I have a budget…in my head.”   Sound familiar?    If so, let 2013 be the year you gain control of your finances and super charge your wealth building efforts.

As a first step, let’s see if we can find your money leaks.    Answer the questions below regarding the next 30 days.   Category definitions and formulas are below the questions.  Notice that the “formulas” are really all the same subtraction problem:   Cash-expenses=cash available for the next expense category.



  1. Does my available cash cover my basic necessities  ?
  2. After paying for necessities, can I cover all my debt payments?
  3. After making debt payments, can I cover my ‘can’t-live-without- them’ conveniences?
  4. After paying  for conveniences,  do I have money left over for savings and investments?
  5. After savings and investments, do I have money left over for a few luxuries?




Cash on hand.  This is the total amount of spendable cash you will have in the next 30 days.  It includes cash in bank accounts, CDs, and around your house.  It also includes any payments you  are sure you will receive within the next 30 days (e.g., paychecks, government payments).

It does not include:  money locked in long term investments (e.g., retirement funds, home equity),  credit card or other loans, or money your friends owe you (they may not repay in time).



Necessities— These are basic expenses necessary for staying alive and earning a living.  Examples include: rent/mortgage, food, medicine, public transportation (or inexpensive car), utilities, basic communication (one cell or landline less than $90 monthly),  and childcare.   Your necessities list should be short. 

Debt payments –  Credit card payments and other installment payments you can’t skip or immediately cancel without  financial penalties and or credit damage(e.g., furniture, car, or education loans) .


Conveniences–  Things you can,   but don’t want to,  live without.  Examples include extracurricular activities for your children, donations,  holiday gifts, extra cell phones, new clothes,  a single vacation,  and cable.


Savings and investments –This includes money saved for emergencies and investments in income producing assets (e.g., rental real estate, stocks, bonds).  For serious wealth builders, this category should come before conveniences.


Luxuries – This is stuff you can easily do without,  usually multiples or luxury brands of the items listed  among your favorite conveniences like  designer clothing  and shoe or video game collections.



  1. Cash on hand – necessities =  Cash available for  debt payments
  2.  Cash available for debt repayment – debt payments  =  Cash available for conveniences
  3.  Cash available for conveniences – conveniences = Cash available for  saving and investing
  4. Cash available for saving and investing- saving and investing = Cash available for luxuries


 If the answer to any of the questions  is ‘no’,  you have found your leak.  Review the underfunded category and the ones prior to it.  What can you do about the shortfall?  Reduce costs?  Eliminate an expense?  Shift the expense to someone else?   Increase your income  (e.g. moonlighting, yard sales)?

I wish you a pleasant and productive week.


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