When you examine your finances and you don’t see the kind of growth that you want, you may have a problem with underearning, overspending, or both. What is the difference between those two problems and how do you identify them?
Mark Butler is a budget-loving finance nerd and is the founder of the accounting startup Let’s Do the Books. He’s been on my show several times, and in this 2016 episode we discuss personal and business finance, underearning, and overspending.
When Mark is hired by a client and takes a look at that person’s or that business’s financial situation, he’s looking for a sense of their earnings, their spending, and the difference between the two. This is how he identifies whether there is an earning problem, a spending problem, or neither. Mark knows that it’s neither if there’s a surplus each month and that surplus is growing and accelerating over time. If that’s not present then there is an underearning or overspending issue.
In order to identify the issue, you’ve got to talk numbers. That might be a really uncomfortable subject for you. I absolutely love talking about money but I know that not everyone does! I invite you to address the elephant in the room and become aware of your financial situation so that you can make choices that serve you.
Join us in this episode to learn all about identifying financial problems, how to be proactive and make choices that will help you in the long run, and the benefits of looking at finances on a 3-5 year time horizon. We get into the details and assign numbers to monthly-expense examples so that you can have a concrete understanding of these concepts. Mark also shares his own story of budgeting and how he overcame an underearning problem earlier on in his career.
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WHAT YOU WILL DISCOVER
- An earning problem vs. a spending problem
- How to identify whether you have one (or both) of those problems
- The difference between underearning and overspending
- How to make choices that help you in the long run
- How to be proactive to avoid financial issues
- Why planning with a 3-5 year time horizon will help you reach your goals