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The Financial Scoreboard

Personal finance is simple math applied to money matters. For some reason our logic gets foggy when there is a $ involved. The lines between want and need blur dramatically. Our ego grabs the wheel and yells, “Put down the calculator and ignore the math!” To stay in the driver’s seat managing our money, it is important to keep it simple.


Trust me. No matter what grades you got in math class, you can do it. You can effectively manage your money and take control of your financial life. If you can master the basic equation: income – expenses = gain or loss, you have what you need. If you don’t master it, debt will always be a part of your life...and likely control it. Instead of you having control of your finances, your finances will have control of you.

Eighty percent of personal finance is nothing more than adding and subtracting. The other twenty percent is simple multiplication and division. Any dollar store calculator or smart phone can do the calculations for you. Of course, there are apps for it as well.


Like sports or video games, if you have too many losses you’ll be out of the game. If you regularly have gains you will rack up wins and the odds start tipping in your favor. The more wins you rack up, the easier it becomes.


Income minus expenses is the scoreboard of your financial life. This is one of the things in life you can have a direct impact on. If you work more and increase your income, you improve your bottom line. Reduce your expenses and you get the same effect. You have influence over the outcome. Use it!


The term “bottom line” comes from the fact that it is the last line of the equation, the bottom line of an income statement, or a net worth calculation. The bottom line is showing you how much you are gaining or losing. It has become a common term used to refer to the end result or the outcome, so it is a great term to refer to your financial results.


If you listen to financial talk shows you may hear the term “top line.” This is used to refer to the income portion of the equation. Your top line is the money you have coming in. Your bottom line is what you have left after expenses (what you spend).


I want to be clear. Managing your money doesn’t mean balancing your checking account. You can balance your account to the penny, but that’s just doing a math problem. Managing your money is about influencing and directing your income and expenses based on your personal priorities. It is more about the choices you make and less about the bookkeeping.


If you make good choices about your expenses in relation to your income, the bookkeeping gets really easy. Like any game, it gets more fun as you improve your score. The more you practice, the easier it gets. With today’s technology most of the bookkeeping and math is done for us.


Yes, you have to keep track of income and expenses, but it isn’t about having organized file folders and sharp pencils. It’s about knowing your numbers and sticking to your financial priorities. A simple budget will make your numbers obvious and help you keep on track. It will also give you confidence in situations that can otherwise be intimidating.


Math doesn’t lie. It just keeps score.

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