We Share A Lot with Olivia Rodriguez
It isn’t that Olivia Rodriguez is 25 and brilliant, works for a hospital, or is a fan of pickleball and GFore clothing.
It is simpler than that.
When she reads about the importance of a budget, like most of us, her eyes glaze over, and she reads something else.
Please read this out.
The end of the year brings renewal and a new perspective.
Olivia took another step. Did a quick tab of her monthly expenses. $5,830 before taxes. That’s $69,690 a year. BTW, she has a very good job in business risk management.
There is much better news for Olivia.
After running an economics-based plan, her living standard jumped to $76,715.
$7,025 of more fun. A 10% pop to her living standard. It’s like free money.
Kinda.
The point and the opportunity:
Life-cycle theory helps us build a better budget
The information provided by Olivia’s economics is better understood.
Olivia’s new standard of living did not require her to stop saving money. Saving and investing were better allocated.
Economics-based finance is a longer-term perspective. For Olivia, it includes a comprehensive understanding of her salary prospects, interest in retirement and charitable giving.
In essence, Olivia’s informed financial wellness.
Olivia’s new spending and savings reflect her income and the taxes she pays. Olivia has other resources, too. Modest savings spread across checking, savings, and a brokerage account. Those are included in determining the 10% lift to her spending cap.
There are uncertainties. Life changes. Updating the plan annually is a good money habit.
I used MaxiFi Planner to build Olivia’s better budget. It’s what I use in class.1
Here at Personal Finance Economics, paid subscribers don’t have to wait for the planners. You have me to help.
You may have a financial advisor. If you have children, grandchildren, or others who do not, send them a gift. It’s in the header.
If you are ready to do some Olivia-like planning, there is a first step.
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Where Should I Start?
Understand your current financial life, but avoid the senseless details. Think about your typical spending in a month. Use my spreadsheet tool to queue your memory. It’s in Chapter 1 of our book and attached here.
When you are ready to know your best budget, spending cap, and highest living standard, let’s talk.
I am launching a new site to train financial planners to incorporate economics-based methods into their practice, because we need more pros to reach the middle-income classes. Join us as a free subscriber now. I intend to launch shortly, and you will get the first post. You may find the less technical case study approach to your liking.
very coooool