The SDB MFC!

Ah yes, the Single Dollar Bill Monthly Flow Chart! What did you think it stood for?

👀😂

In the process of establishing core values, it’s important to look at where our money is currently going every month. It may be intimidating at first, but I promise it gets much easier and less time consuming as time goes on. If money seems to be going out faster than it’s coming in, budgeting is an absolute necessity.

“UGGGGGHHHHHHH budgeting sucks!” I know, I know. The term budgeting has gotten a bad rap over the years. I even read somewhere once that people shut down when they read the word “budget.” It’s my hope that you fellow Savvy Solos won’t let a simple word scare you from reaching your dreams!

The above spreadsheet is available for you to download completely for free! Create one on your own if you so choose, but I would suggest first time budgeters utilize this one at least in the beginning.

Compared to the net worth spreadsheet, this one gets into the nitty gritty, allow yourself to take breaks if you get overheated. Don’t get hung up on getting the numbers right down to the penny. You can get that detailed if you like, but you shouldn’t be spending any more than 2-3 hours on this thing.

Like the net worth spreadsheet, it’s interactive, so you’ll save a bit of time on simple math. You’ll see that I have 3 incomes up at the top. One of the struggles of being single/solo is that a lot of us have one income to our household. I’m not insinuating that singles need more than one job. Many Savvy Solos out there have already jumped over this hurdle and created multiple streams of income; I wanted to give everyone space to customize this chart to their liking.

You’ll see Total Gross Income and Total Net Income after it. Gross Income is the amount you are paid before taxes and deductions. For total net income, I want you to add together your net pay after all taxes and deductions (meaning only the money that actually hit your bank account for those with a W-2 job). To do this quickly, hop on to the app used for your checking account and total up what you were paid for the month. For self-employed, use a conservative estimate.

“I have a variable income!” I know, so do I. The best way to do this is to take the average net income of the last 3 months and put that number down. So, if in the last 3 months you were paid $4,125, $5,620, and $4,350 you would put down $4698. If one of those months had some extraordinary bonus or commission you don’t consider normal, go back to a previous month. Make sense? Shoot me a message if you need help with this.

Use the same strategy on variable costs. Things like groceries and utilities might vary drastically; just use your best judgement and, again, please don’t get hung up on too many of the details.

You filled it out to its entirety? Congrats! Save this spreadsheet with today’s date and save it to a folder on your desktop. Give yourself a big pat on the back and grab a beverage of your choice (adult or otherwise 🤪)! You just accomplished what most people never do!

Alright, are we feeling good? Let’s take a look back at the MFC!

First thing to look at is right at the bottom. Your freedom total $ is the money that you currently don’t have accounted for. If this is showing a negative number, we’ll need to take a real long look at where exactly your money is going. For those that have a positive dollar amount, you can use this money for any number of things. I’ll encourage you to use some of it for fun, but more on that later.

You’ll notice that there are % signs of where your money is being allocated. There aren’t necessarily restrictions on allocation, but there are certainly red flags. If 75% or more of your income is being spent on fixed costs, it might be time to evaluate what on that list (if any) can be lowered or even taken off temporarily.

You’ll also see where I have Housing % of Income. Some advice out there states that only 30% of your net income should be going towards housing. It’s not intended to scare you, just something to keep in mind for now. In fact, depending on your situation, if you live in a high cost of living area it might be totally reasonable that your % is higher. If downsizing your living situation doesn’t seem possible, it might be time to explore ways to increase your income.

If you aren’t comfortable with where your numbers are at, it’s time to make a change. In fact, right now might be the time to reach out to a financial coach if you need help in this area.

By now you have saved a copy of the current MFC! with today’s date. Make a new copy of the spreadsheet and label it Target MFC!

Start thinking about that freedom dollar amount. What can we trim off to make that number greater? Start off with small things. Consider making coffee at home perhaps, or maybe start making a grocery list so that you aren’t blindly buying things you don’t use. You can expect to shave off at least $50 per month in this category if you get into the regular habit of buying only the grocery items on the pre-ordained list.

I highly recommend budgeting some time to go down this list and call or email every single recurring payment you have to see if you can make it lower. Things like insurance, internet, and gym memberships seem like they are set in stone. Threaten to leave them for another provider offering the same/similar service at a lower price and a surprising number of them will comply.

After you have made a few adjustments on the MFC!, go ahead and allocate where you plan to put the Freedom $. It could be towards debt, it could go towards your Roth IRA, or how about going golfing? Why not all 3? Allocate this money on the spreadsheet for now in a way that brings you the most value for the upcoming month. DO NOT actually spend money you haven’t received yet!

At the beginning of the next month, after you have paid all your bills, make sure that the freedom $ is around (doesn’t have to be exact) what you thought it would be. Is it higher because you overestimated how much you would spend? Awesome, more money to play with! Is it lower because you underestimated how difficult these changes would be? No worries! It’s all a learning curve at this point. It took me about 3 months to get a real handle on things, particularly my groceries.

In future blog posts, we’ll discuss different tactics on how to save and earn more money. For right now, try to focus on cutting out the things that aren’t currently bringing value to your life.

Maybe you absolutely love going to Starbucks everyday, it’s the only thing that keeps you motivated. I’d say, “Have you been to Dunkin Donuts yet? Starbucks is for chumps.” No but seriously, the MFC! isn’t intended to take anything away that you truly value. It’s intended to lay it all out there, so that you can make the conscious decision that is best for you.

Like I mentioned earlier, budgeting is something that really takes time. Don’t stray away from it if you aren’t mastering it right away. If, after several months, you still can’t seem to get the hang of it, it might be time to reach out to a financial coach to assist you in the process.

Stay classy Solos! ✌️