Liam Croke: The numbers don’t lie, so know the big ones

Liam Croke


Liam Croke

Liam Croke: The numbers don’t lie, so know the big ones

Nike creator Phil Knight: You are what your numbers say you are. So, get to know the important ones

I recently finished one of the best books I have read in years, if not ever. Shoe Dog is a memoir from Phil Knight, the man who created Nike, and it's a great read.

Unsurprisingly, Mr. Knight was an athlete who loved to run, and the 1,500 metres, the blue-ribbon event of the athletics world, was his race.

In the course of his book, he said running gave him a great respect for numbers, because he said you are what your numbers say you are, nothing more, nothing less. If he posted a bad time in a race, there might have been any number of reasons why i.e. injury, fatigue, but no one cared, and in the end all that he, and anyone else, would remember was his time.

The idea that you are what your numbers say you are really resonated with me from a financial perspective, because it’s so true. And like running a bad race, you can offer up all the excuses in the world why your finances are not in a better place than they should be, but no one really cares.

Numbers will tell you what areas you need to improve and focus on, so over the next two weeks, I’m going to give you 12 numbers that everyone should know about their finances - six this week and six next week.

Your Overhead Number

The number you are looking for here is how much of your income is taken up by the essentials, i.e mortgage, food utilities etc...

Add up these essentials and divide it into your net monthly income. If those expenses are €2,000 pm and your income is €2,500, you’re spending 80% of your income on essentials. If this was the case, you will struggle to save for retirement, struggle to spend money on non-essential items and this could invariably lead to accumulating debt.

The number you should aim for and compare yourself against is 50%.

Debt to income Number

You calculate this by dividing your total monthly debt repayments into your net monthly income.

If your total debt repayments, inclusive of mortgage repayment are €1,500 and your net income is €3,000, your debt to income ratio is 50%.

The recommended number here is that if you only have a mortgage, it should take up no more than 28% of your net monthly income and 36% when other debt is included. This is important to know because a high number will mean too much of your money is going towards debt repayments and there isn't enough left to meet other goals or unforeseen events - saving, holidays, suffering an income shock, illness.

Interest Rate

A survey carried out by the Competition and Consumer Protection Commission (CCPC) found only 52% of respondents claimed to know their mortgage interest rate.

The interest rate you pay will influence what your monthly repayment is and the total amount of interest you end up paying, so if you don’t know what rate you are paying, find out. A slight change to this number can have a big impact on your finances and given that your mortgage payment is probably your biggest outlay each month, you need to know what it is.

Savings Rate

The number you are looking for here, is the amount you personally save each month, inclusive of what you are putting into your pension, as a % of your income. If you are saving €400 pm and your income is €3,500, your number is 11%. The recommended number you are looking for in this instance is between 10% and 15% of your monthly income.

Net Worth

You calculate this by adding up everything you have of value like your house, cash, furniture, jewellery and subtracting everything you owe from it.

The ideal number you are looking for here is calculated by multiplying your age times your gross annual income divided by ten. So, if you’re 40, and your annual income is €50,000, your net worth number should be €200,000 (40 x €50,000 / 10)

If you're net worth number isn’t what it should be, don't get too disheartened.

Knight, said at one of the first meetings he held in Japan, with the manufacturer of a running show he was first going to sell in America, his total net worth at that time, was the suit he was wearing. His net worth now is estimated to be c. $31.6 billion.

Rate of Return

I cannot underestimate the importance of knowing what your number your pension fund is going up or down in value by ever year.

A new client of mine began to take notice of what his number was when we first met because his annual return was 2% when everyone else’s was 6%. This was because he had been in the wrong investment fund. But had someone not taken notice of this for him, he wouldn’t have noticed and he wouldn’t have made the changes required.

Liam Croke is MD of Harmonics Financial Ltd,

based in Plassey. He can be contacted at or