Exploring margin, short cuts, and help

Welcome to the Intentional Dollar weekly newsletter — great work taking this small step to move your money forward. I’m Logan, a Certified Financial Planner™, and I’m excited you’re here!

What’s inside?

• One tool to experiment with

• Two quotes from others

• Three questions to dig deeper

• Four lines of poetry for the point

_{One tool to experiment with:}

Margin:

What money margin do you have at the end of each month?

Money margin is the space between what we make and what we spend. Like a corporation with strong, consistent margins, a higher margin creates a healthier financial life.

When our margins are thin, we run the risk of using debt, or accessing reserve cash to continue our daily living operations. Thin margins are often a symptom of spending what we make. This happens because the dollars coming into the account don’t have a job. They sit idle in the account until we send them off toward a purchase.

This strategy leaves our fickle willpower in charge of policing our spend with the hope of leaving some margin at month end — not an effective strategy.

If we zoom out and look at our cash flow, inflows and outflows, we’ll see that the margin, the stuff we keep, is what we use to move our money forward. The margin you save or invest builds future financial strength. Emergency funds, retirement funds, house renovation funds, travel funds all have one thing in common — they are built through margin.

How do we build margin?

One way to answer this question is to invert it — how do we not build margin? A high probability way to not build margin is by waiting until month end to save money. When the dollars are idle and present, we’ll find ways to spend them.

This also explains why our spending can outpace our rising incomes. What financial moves did you make when you received your last raise? Hint: it probably was not increasing 401(k) contributions, or your monthly cash savings amount.

I can personally admit that I’ve fallen victim to the lifestyle creep phenomenon. Income can create access to things that were previously inaccessible. The purchase you wouldn’t fathom before due to price, now finds its way to your doorstep each month.

The way around the margin problem is to set your target margin on the front end. Maybe you have $4,000/month coming in after taxes. Instead of looking at that as your monthly inflow, take 85% of that and treat it as your spending income, or $3,400.

To supplement this spending cap, sending $600 out of your normal bank account into a savings account on the first of each month will ensure you don’t fall into the “see it, spend it” trap.

If you want to get ahead with your finances, you have to build margin. Create your own spending constraints by saving first.

_{Two quotes on shortcuts:}

Impatience fosters a frantic search for shortcuts. In building wealth, you have to take the long path.

_{Three questions on help:}

1. What financial problem is causing 80% of my stress?

2. Who might be able to help me with that problem?

3. What’s the cost for not reaching out?

Which question stuck with you? Questions like these are spotlights for the mind. Reply to this email and let me know which one shined light on a previously dark cave.

_{Four lines of poetry for the point:}

Contact Me:

Content ideas, questions? Reply to this email or reach out to me at [email protected]