Know Your Numbers

🎼 📖 Read Intellego #018 by listening to:

Hozier - “Too Sweet”

Life & Numbers

Imagine a world without numbers. It's inconceivable, I would say. We live in a society that is built upon and revolves around numbers.

They are an integral part of our lives. From the moment we're born, they appear on our personal documents, work badges, performance measures and medical records, all the way to our last moments.

In this number-driven world, some may prefer quantity over quality, while others prefer the opposite. But do you know your numbers, your metrics? Where are you in life? How would you rate your life experience on a ten points scale?

Let's do a quick exercise. Think of your monthly income. Now think of your monthly expenses. On average, how much money do you spend on groceries, utilities and restaurants?

How's your budget - surplus or deficit? Positive or negative? Well done, if you're aware of your numbers. If not, it's time for a money makeover.

Understanding the mechanics of money management is crucial to achieve financial security. Controlling your finance is a fundamental aspect of life. Budgeting is a powerful tool that can help you amass wealth and reclaim time.

But before we tap into the money talk... There are two types of people reading this text:

1. Those who live a life without planning, from paycheck to paycheck, believing that time is an enemy. Those who live in survival mode or have little clarity about the week and uncertain goals. Those who often repeat harmful cycles and complain about boring routines.

2. Those who understand time is your best ally, who have done their planning and will align their goals with everyone in their close circle. Generally, those in the second group tend to overcome their own limits, break records, and eliminate toxic behaviors.

Take ownership of your life situation. As the CEO of your own existence, it’s vital to embrace self-responsibility. If you don't adopt this attitude first, you won't be able to instill a prosperity mentality in your family or close ones.

Self-responsibility includes self-respect, self-care, and cultivating a deeper sense of awareness of your actions and decisions. Meaning you're committed to your future self.

As mentioned in edition 002, your mindset directly impacts your earnings. In the digital age, freedom and flexibility are invaluable but come at a cost. To achieve these luxuries, upfront effort and investment are necessary.

As Milton Friedman once said, “there’s no such thing as a free lunch”. Nothing in this world comes without a price. But we can reach progress through our choices, decisions, commitments and daily actions.

Budgeting Basics

Budgeting involves creating a plan for your income and expenses, allowing you to determine in advance whether you will have enough money to do the things you need to do or would like to do.

Budgeting doesn’t mean saving on all of life's pleasures. Rather, it means understanding your financial situation so well that you can afford to live the life you want without undue stress.

The process starts with knowing your numbers—your total income and your total expenses. This includes fixed expenses such as rent or mortgage payments, car payments, and insurance, as well as variable expenses like food, entertainment, and clothing.

Savings = Total Income - Total Expenses

By subtracting your total expenses from your total income, you determine your disposable income. The aim is to ensure that this number is positive. If it's negative, it's an indicator that you live beyond your means. You spend more than you earn, so you took a path that leads to debt and financial stress.

The Method I use

Zero-based budgeting is one effective method of budgeting among several strategies out there. Particularly, my favorite one. Where you assign a specific role to your money, whether it’s spending, saving, or investing.

This technique ensures that every dollar has a purpose. Money is energy, remember? There are no dollars unaccounted for, which can significantly help in reducing wasteful spending.

With zero-based budgeting, you start each month with every dollar assigned to a category, and every new expense must be justified in how it fits within the budget, fostering a deeper understanding of your financial flow. It requires discipline.

Building Wealth

The goal of budgeting isn't just to keep your finances under control. But helping you to build wealth. You can achieve this goal in several ways by:

1. Increasing Savings: By monitoring where your money goes, you can identify areas where you can cut back. You can redirect these savings into investments or savings accounts that yield returns. Take advantage of the power of compounding.

2. Debt Reduction: With a clear budget, you can strategize to pay off debt faster. Allocating more money towards debt repayment can reduce the interest paid over time, freeing up money for future use.

3. Investment: Through effective budgeting and regular savings, you can choose to invest in stocks, bonds, mutual funds, real estate, or other investment vehicles. Over time, these investments can generate passive income, money that you earn without actively working for it.

Reclaiming Time

One of the less discussed but equally important benefits of budgeting is how it can help you reclaim your time. Time is a non-renewable resource, and how we spend it has a direct impact on our quality of life.

Financial stability reduces the time required to manage debts and financial crises and also affords you the freedom to make choices that can lead to more free time.

1. Career Choices: With a solid financial base, you have the freedom to choose a career you love without the pressure of earning a high income just to cover your expenses. You can even take a sabbatical.

2. Reduced Stress: Financial issues are a common source of stress. With a budget, you reduce financial uncertainties and the stress that comes with it, freeing up your mental space and time to engage in more fulfilling activities.

3. Early Retirement: Effective budgeting can hasten your path to retirement, enabling you to shorten your working years. If you wish so.

Practical Steps

Here are some valuable steps you can follow while budgeting:

1. Track Your Spending: For one month, keep track of every penny you spend. This will give you a clear picture of where your money goes.

2.  Set Realistic Goals: Based on your tracking, set achievable goals. If dining out is draining your finances, consider setting a budget for it instead of cutting it out entirely.

3. Use Budgeting Tools: Take advantage of the multitude of free and paid budgeting apps and tools that can simplify creating and maintaining a budget.

4. Review Regularly: Your budget should evolve as your financial situation changes. Regular reviews are necessary to adjust your spending and saving strategies.

Budgeting is not just about monitoring your expenses. It’s about creating a roadmap for your financial journey. It’s being accountable for your future, minimizing stress, and getting peace of mind.

Knowing your numbers gives you control over your financial future and the freedom to make life choices that can lead to greater happiness and satisfaction.

By harnessing the power of a budget, you can build wealth more effectively and reclaim one of the most precious resource you have—your time.

PS: I ask your prayers to Brazilian population. Severe floods devastated entire cities last weeks. If you can donate, please see details here. Thank you! 💛

Talk to you next week.

Light and peace,

Dum Spiro Spero! ⭐

—FMV

🧠 My Mental Download:

📕 (1) What I'm reading:

-Your Money or Your Life

🎧 (2) What I'm listening to:

-Undercover

🤓 (3) What I'm studying:

-More than Money

🤿 Keep diving and exploring:

💱 My Go-to Platform to Make Transfers Abroad →

💸 Where Part of My Money Grows →

🤑 My Day-to-Day Use Digital Account →

📰 Discover Other Newsletters I recommend →

📩 About the Intellego Newsletter:

💡 Intellego is the process of gaining insights to better understand the world.

✍️ Letter is written by Fabíola Maia-Veres every Tuesday at 7pm.

🐝 Newsletter is configured and sent by BeeHiiv.

💬 📝 How did it go?

Any comments, critics, or suggestions? Reply to this email or reach out on Instagram or LinkedIn. Your feedback fuels my writing.

📌 📋 Note of this edition