Making Cents with Liam Croke: ‘90-day number’ sheds light on your finances

Making Cents with Liam  Croke: ‘90-day number’ sheds light on your finances

Can't understand why you're broke at the end of the month? Read on

“I’ve no social life, I don’t buy much in the way of clothes, I shop at Lidl, but, yet at the end of the month, there’s nothing left in my account, what am I doing wrong?”

Those were the first words spoken to me by a woman I met last week.

She reached out looking for help, because she couldn’t save, had very little savings, and at the end of every month it seemed she was counting down the days until she got paid next. She was clearly under pressure and didn’t know what she was doing wrong.

She was constantly living in the red and felt that she was working just to pay her mortgage and utility bills, and had nothing to show for herself, only living with stress, hoping she didn’t lose her job, or the car didn’t break down.

“Solve my problem”, were the next three words out of her mouth.

But I couldn’t immediately solve her problem. Unfortunately, she was looking for the easy way out and there was none. When I quizzed her about how much she spent on shopping, transport, insurances etc, she wasn’t able to tell me.

If she didn’t know, how could she expect me to solve her problem? It was impossible, so she was going to have to work with me, and there wasn’t going to be a quick fix either, it was going to take time, and our starting point was taking a cold hard look at what her financial input (income) and output (outgoings) was each month.

Before you can improve your financial situation, you need to get a handle on what your monthly outgoings are. You need to identify how much you are spending each month, and on what. But sometimes we don’t do what we know we should.

If and when you do, you are going to uncover one number, and it’s either going to be positive (surplus) or negative (deficit). If you want to know what your number is, you have to follow the money on a monthly basis; that means tracking what you spend your money on.

When it comes to your finances, if you continue with the strategy of ignoring and avoidance, it will cost you money and I guarantee you, it will prevent you from making progress. And here’s the thing: it’s all avoidable.

One of the reasons financially secure people are the way they are, is because they track their spending. They don’t have to, but they understand the importance of catching those areas they are spending too much or too little on before they become bigger problems. And they all will tell you, knowledge is power.

For anyone who wants to improve their financial situation, I strongly recommend you follow your money, and record what you spend it on.

The key to making sure it’s accurate, is to do it over a three-month period.

I used to think one month was enough but it’s not. It doesn’t tell you enough and it’s hard to get it right the first time you do it, which is why it will be much more accurate if you track your spending for 90 days.

You can record your spending on an excel sheet, on an on-line tool, back of an envelope, it doesn’t really matter, whatever works for you. You just need to track every euro you spend, from the trivial of how much you might spend at the car wash, on a lottery ticket, a bottle of wine to the bigger ticket items like utility and car loan repayments. You need to write them all down.

At the end of three months, add up everything you spent, and subtract it from the income you earned over those three months. The difference between both is your 90-day number.

Now you have a real good idea of what you are up against and what areas need attention. In many instances, they are the very ones you never thought would have any impact and are the reason for your cash flow problems – but now, at least you know what they are.

This is a great exercise even if you have a healthy surplus in your account every month, when there is no obvious reason why you should bother doing this exercise, but there is. You want to optimise that surplus and put it to good use.

This exercise will confirm whether you can choose to dial back the pace at which you work and earn a lower salary or give you the confidence that you can put more money into your pension, or you can overpay on your mortgage or you can just spend more money on yourself and your family.

Your monthly cash-flow has an impact on every aspect of your finances, and unless you are creating a surplus each month, you will be able to achieve some but not all, of your goals. It will also help around present and future decisions you may have to make, but you need clarity around your numbers first.

You may not have a spending problem at all, it’s an income one, and now you know you need to focus on getting a higher paid job or becoming more valuable to your employer where they will pay you more.

Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at or

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