For those of us who don’t like number-crunching, pull your pants up because it’s time to grow up. I got a stark reminder about this after one director at my old job lectured us for not knowing our numbers. What he said is a simple truth that translates across all facets of life. But it is particularly relevant to our biggest personal bane: the personal budget.
I was previously an Operations Supervisor cum Business Intelligence Manager at a Canadian marketing agency called Mosaic. In short, my role very much so dealt with numbers — not in the conventional currency sense, but in all other definitions. We deployed brand ambassadors into stores all across Canada to complete shifts every weekend. You can use your own imagination what sort of numbers we would have to pull up and analyze.
One afternoon, our particularly… charismatic director challenged us. We had failed to recall (by memory) the number of shifts we were deploying within each region of Canada that weekend. He proceeded to lecture us, emphatically emphasizing this point:
“If you don’t know your numbers, you can’t manage anything.”
I took it to heart. But there was something irresistibly charming to this undeniable aphorism. How can one manage anything if you don’t know your numbers — inside out, frontside back?
I trust that this adage rings true across everything in life. From advanced analytics in sports to gas mileage on a vehicle to tracking your macros in a diet. But the obvious and immediately applicable candidate for this would be one’s own finances.
Those of you who know me well, know that I keep a near-perfect log of all my financial transactions. No, seriously. Since Oct ’17. Every single penny that has moved in and outbound has been meticulously recorded. I can tell you how much I spent on coffee in Dec ’17.
You might take a look at that chart and ask, “what’s the point of knowing your coffee spend from 2 years back?”. I don’t give a fuck if you don’t care. I care. I know I average around $30 CAD a month for coffee here in Taiwan, going out for a sip an average of 10 transactions per month. Comparatively, I also know I averaged around $30 CAD a month for coffee back home in Canada two years ago, also over around 10 sessions a month. It might seem like useless data to you, but it is nevertheless a data point. Taiwanese and Canadian coffee prices are extremely similar.
I can integrate my credit card with expense-tracking apps like Mint — but that don’t hurt bad enough. I want it to hurt every time I spend money. Having a Google Sheet where I painfully punch in yet another expense-type under “Transportation” because I had to take a cab (due to poor planning) hurts. Having an app do it for you makes it invisible.
Here are some other random stats from Taiwan Q1 2020. I averaged around: $350 CAD on food; $200 CAD on groceries; and $160 CAD on transportation. I know approx. how much I should be spending on each category every month. I started the year going out for food 48 times, and in March went out for grub 66 times. I know where a course correction needs to be made, and will be eating out less during April. In any given month, I expect myself to go to the gym and pay my $2 CAD entry fee 12 times. In both February and March, I failed to reach this threshold, having only gone between 7–8 times each month. I’m an unhealthy fuck.
Knowing your numbers empowers you. It enriches your decision-making with data. Because if you don’t know your numbers, you can’t manage anything.
Another important metric: the Burn Rate. I always knew what a Burn Rate meant, but until I put it into action, it was hollow knowledge. With a meticulously kept record of my cash flows, I could leverage my obsessive compulsive disorder and have it become knowledge in-practice.
I have to thank my friend Nikita for the evergreen reminder. It was back in June ’17, when we convened in Colombia, that we pontificated over the realities of long term travel. At the time, he was still in the midst of a multi-year backpacking trip as a digital nomad. I wanted to be like him. So I asked him for his advice. He stressed the significance of knowing his Burn Rate. He knew his numbers.
Burn Rate, for my own purposes, is defined as how much cash I spend on a daily basis. If I know the sum total of my cash flow in a given month, it becomes extremely easy to calculate. I take my sum and divide it by the number of days passed so far in the month. For example, if I have spent $1000 CAD in 15 days so far, my daily Burn Rate is calculated as $1000 / 15 = $66.67. Grade school math empowers my decision making.
My aim, while I have been travelling, is to burn around $50 CAD a day. That is ascetic. But this stark goal allowed me to travel for 8 months relatively comfortably and still end with some cash left in the bank. Some survive on much less.
I know if I keep record of all my daily cash flows on a Google Sheet, I can dynamically calculate the number of days passed so far in the month and roughly ascertain how much I am burning everyday. This gives me a constant gauge that tells me if the needle is being pushed up or down by my latest expenses.
You may have inbound cash flow(s) that modulates your burn. For all of my time travelling, I didn’t. I had a threadbare starting budget (which carries over each month) that trickles down with each and every expense recorded.
Like we are supposed to #flattenthecurve with the coronavirus, I #suppresstheburn. I hope that doesn’t sound like a campaign against herpes. Although, fuck herpes too.
Obviously, this is all done in idiosyncratic style. My spreadsheet would look like a nightmare to an Excel junkie, and a matrix of incomprehensible flubbery to a layperson. My math almost certainly would make a professional accountant shake their head. Nevertheless, it works for me. It might not work for you.
But I know my numbers. And I manage my finances.
Do you?
Hey! If you actually made it this far into my article, then thank you from the bottom of my heart for your consideration, patience, and love for reading so much of my work. Words cannot express how much I appreciate it.
They say ‘writing = clear thinking’, so I am on my own journey to crystallize my thinking (and thus my writing). If you enjoyed this article, you can find more of my work on Medium here. I also occasionally make long form blog-style posts on Instagram here. You can also find me blabbering on Twitter here.
Do you know your numbers? What’s your tip or secret? Share in a comment below :)
