Can You Do Fifth Grade Math?

Personal finance is simple–people say it is fifth grade math.  I don’t remember anything about fifth grade so I’ll have to trust them on this.

What we earn – what we spend = Surplus or (Deficit)  also known as “the gap”

We have to pay attention and grow this gap either by increasing our earnings, decreasing our spending or both.

We can implement lots of complicated tools to help us mind the gap but it really isn’t necessary.

My husband and I keep our money separate so we each have our own methods.  He uses a calendar.  Yep, one of these:


Each day, he makes a note about what he has spent (“Dinner-Dave & Judy-Cold Beers & Cheeseburgers $45”).  At the end of each month, he totals what he spent in each category (he has only about 8 categories), he totals his income and calculates his gap.

He then lists the balances in each of his investment accounts, subtracts any debt (credit cards which he pays off monthly) and calculates his net worth.  He takes the difference in net worth between this month and last and writes down the increase/(decrease) in net worth.

It takes about 20 minutes.

There are lots of cool things about this method:

It is simple and doesn’t take much time.

He also tracks friends birthdays in these calendars and never misses one (he’s way better at this than I am).

He keeps these books; he has them going back over 30 years.  It serves as a diary of sorts.  When we can’t remember if our first date was the 30th or the 31st of January, he pulls the book from 1987 and can tell me.  If I need a good laugh, I pull a book from pre-Ms.Liz.  I remember asking him what mouse .50 meant in these old books–well that was when he was buying food for his snake EWWWWW!  If we’d met 6 months earlier, he would not be Mr. Ms. Liz.

My method is more complicated and more time consuming but no more effective–I track my spending in Quicken and I budget in Excel.

Cait Flanders has a beautiful solution and I hope she releases a 2017 version.  It takes my husband’s calendar approach but improves upon it with sections on goal setting and inspirations.  I gave two of these to my (now former) colleagues and one used it to get out of debt and is now on track to achieve impressive savings goals!  She didn’t realize how much money was slipping through her fingers until she started writing everything down.

Attention is given to what is written.  As you track your spending, it gives you an opportunity to think about your choices.

If it was a necessity,

Was this a good value?

Could I have met this need differently or less expensively?

If it wasn’t a necessity,

Did it bring me joy?

Will I remember it next week?

Is this keeping me from achieving my goals?

It won’t take long and these questions will run through your head before you pull out your wallet.

Then you can write down what to do with all that extra money–which is way more fun!

How do you keep track of your finances?  What questions do you ask yourself before pulling out your wallet?

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Author: Ms. Liz

A CPA, I retired at 51 and I am helping people create their fantastic futures!

9 thoughts on “Can You Do Fifth Grade Math?”

  1. I am the aforementioned former colleague that has been using the Cait Flanders Mindful Budgeting planner. I have found it to be a very helpful tool, but I also think that just about any method would work. For me the key has been to accurately track every $ I spend. I have been surprised, in both good and bad ways by how I spend my money. Creating a budget and spending mindfully is huge to achieving your financial goals. Since I have been doing this I have paid off all my debt and have been able to make some real progress towards my savings goals. Actually writing down what my plan is at the start of each month helps gives me something to shoot for, checking in weekly and recording all my spending/earnings and measuring my progress keeps me in line. It’s like the planner has become my accountability partner. I am anxious to see my numbers at the end of the year. It will help me realize where I have opportunities to cut my spending, I think I have a pretty good idea already…

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