Do the Math

This is a sensitive topic but one, I feel, needs to be addressed nonetheless. My reflections are inspired by these words furnished by my newsfeed,

“If only our bank accounts could fill up as quickly as our laundry baskets . . .”

A collective sigh of agreement may be the first inclination of responders to the above wish. And to be honest, there have been COUNTLESS times I personally have wished for deeper pockets. Here are a few of them:

  1. The day I received my first statement regarding my doctoral loans for the superb training I received at the prestigious Eastman School of Music
  2. The day I signed papers assuming financial responsibility for colossal costs related to unexpected deaths in the family
  3. The day I heard of the devastating impact of Hurricane Harvey on friends and strangers in Houston

Still, I am here to ponder why so many savings accounts in the US are pitifully close to empty and why 64% of US checking accounts are overdrawn while laundry baskets are grossly overflowing.

This is what I am thinking:

Collectively and individually, we put dirty clothes in laundry baskets (and washers + dryers) because we desire to have something clean to wear the next day and the day after that. To me, that shows we’re extremely capable of planning ahead and routinely thinking of future needs.

What if we were to use those very planning skills in financial matters?

As in, today, we may have a job; tomorrow, we may be unemployed. Today, we may be healthy but tomorrow could be a different story. Today, the car may be working just fine but tomorrow it may take $1700 to get it out of the shop. Today, “aunt Mae” may have just announced she’s planning on coming next month to spend Thanksgiving with the family but tomorrow the 6-member family may need plane tickets ($1200 a seat) to travel across the US for her totally out of the blue funeral.

What if atrociously dire circumstances could be reduced or eliminated altogether just because needed funds are already set aside to address emergencies?

Financial experts tell us:

  • give 10% or more
  • save 10-20%
  • invest 10-30%
  • reduce your tax liability
  • and live on the remaining balance

For a family with a gross annual income of $70,000, the math could possibly look like this:

give 10% ($7,000)

save 10-20% ($7,000-14,000)

invest 10-30% ($7,000-21,000)

reduce tax liability (your giving helps; your savings and investments can help significantly if you employ tax-sheltered accounts; see your accountant)

live on the remaining balance (income minus giving, savings, investments, tax liability equals net spendable income)–that means, a family with a $70,000 gross annual income could possibly have a net spendable income of $30,000-32,000

Yet most of us do not do the math. We spend money as it comes. And when it doesn’t come, we borrow anyway. And so, a $70,000-income family often spends more like $100,000 with the assistance of good ole credit until the hole gets so deep bankruptcy is inevitable.

We may say, “If only I could net at least $100K annually then I would be set,” but the truth is if we don’t do the simpler math required for a $30K annual income, we’ll only have a bigger math problem with a higher income.

This is my plea to men and women, young and old, anyone really with ears to hear:

Whether Grandma gives you $20 for your birthday, or you net $200 from a garage sale, or you earn $2000 every two weeks, or you are the lucky winner of 2 million, please listen to the experts and obey the math.

And for us, Americans, our country cannot continue on its current financial path. We cannot wait for the government—any government, for that matter—to fix our economic crisis when we don’t bother to do the math before spending.

Let’s do the math before buying that 🍨, before leasing that 🚘, before buying that 🏡, before charging that ✈️ or that 🚢.

Author: Louima Lilite

I am a husband, dad, musician, teacher, friend, and confidant who loves to learn about and implement principles of freedom in all areas of life—be it money, spirituality, relationships, or health, etc.

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