1. 9/4/2011 © 2009 Wavefront Management Company, LLC 1

2. Daily Money Management in
a Changing Economy
by Brian Schweitzer, Author
Based on the Book “Where Does the
Money Go?: Introducing a simple
method for real-time, adaptable
management of cash flow, expenses,
savings, and debt,” ISBN 0595686931.
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3. Presentation Overview
• The economic climate is continually changing
• Our personal financial needs will change
• Personal money management must be continually adaptable
• Only you can effectively manage your own spending
• Traditional budgeting methods do not provide adaptability
• Some of our largest personal expenses are not monthly
• The One Number Mindset method provides adaptability
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4. Daily Money Management
• When the economical environment changes, we must
change our money patterns to adapt
 2 primary changes we control – income & spending
levels
 Spending levels should depend on:
 income
 debt levels
 chosen expenses
 other expenses
 savings goals
 lifestyle choices
• Personal financial situations are like fingerprints – no 2
alike
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5. Daily Money Management
• No one but you controls what you buy or the level of
purchase
• No one but you will fully understand your lifestyle and
spending patterns
• Therefore, no one can provide you with an exact
quantitative money management solution that is
continuously adaptable
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6. Daily Money Management
However, you can learn how to better manage your money
including:
• How to prioritize expenses and expense levels
• How to adapt to life’s changing economic climate
• How to adapt real-time to surprise or emergency
expenses
• How to control debt accumulation
• How to ensure savings for future needs and major
purchases
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7. Daily Money Management in a
Changing Economy
The method I will present:
• Will start you thinking differently about you money habits
• Will take time to fully implement and be a part of your
daily life
 It is no more of a burden that your current method
(whatever that is) and may become less over time
• Money management takes some time regardless, but time
should be minimal after setup and most importantly,
effectively spent in terms of generating results
• Will not magically create money from ? or cash flow
(these are gimmick schemes)
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8. Daily Money Management in a
Changing Economy
What this method is not:
• Not a quick get rich or debt relief scheme
• Not a patch for financial problems.
 But your mindset will start changing, and any
results are possible within time
• Not about being extra stingy.
 But spending more than your inflow for long
periods cannot bring any result other than debt
problems, and eventually necessitate lower
spending and major money management changes
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9. Daily Money Management in a
Changing Economy
Long-term results of the One Number Mindset method:
• Realize more control over finances
• Realize more efficient spending
• Improve ability to meet savings goals
• Control debt accumulation that you can’t pay off
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10. Daily Money Management in a
Changing Economy
Traditional budgets don’t work because:
• They are inflexible (more to come)
• They are a fixed list and level (amount) of expenses
• They don’t prioritize
• They don’t consider expenses more sporadic than monthly
 Taxes, tuition, gifts, emergencies, repairs, projects,
large purchases, spontaneous purchases, etc.
• Frustrating because of the above – people usually give up
People budget to be precise.
• In reality, life is not precise or predictable, nor is spending
associated with it.
• You must incorporate flexibility into daily money
management to improve accuracy
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11. Daily Money Management in a
Changing Economy
Why do you need flexibility?
• Assumed fixed monthly expenses can change!
 Examples - swings in gas prices, utility pricing
changes, inflation can (will!) hit day-to-day purchases,
economy may necessitate moving/relocating,
technology changes (we like to stay current), etc.
• How do you include non-monthly expenses in a monthly
budget?
• Can we accurately predict non-monthly discretionary
purchases?
 Clothing, household items, electronics, etc.
• Can we adjust our budget real-time for emergency or
urgent expenses?
• Do we ever purchase spontaneously?
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12. Daily Money Management in a
Changing Economy
Why do you need flexibility?
Year-on-year percentage change in monthly energy prices, food prices, and the rest of the CPI inflation basket Jan 1960 -
October 2007. Source Bureau of Labor Statistics. Graph is not zero-scaled.
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13. Daily Money Management in a
Changing Economy
What budgeting provides:
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14. Daily Money Management in a
Changing Economy
What you need:
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15. Daily Money Management in
a Changing Economy
• If you don’t know where your money is going it will
disappear
• Getting control or personal finances doesn’t just happen,
and will not simply improve just because your inflow
improves.
• Conscious decisions and management are required to:
 Adapt your finances to a changing economic world
 Reduce debt and control debt accrual
 Improve savings to meet goals
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16. Daily Money Management in a
Changing Economy
How do you know where your money is going?
• Understand inflow
• Understand expenses
• Understand expense priorities
 These can change over time due to improved money
management, changes in inflow, or financial
hardship
• Understand expense timeframes (i.e., forecast)
• Track and document monthly (at a minimum)
• Manage daily
• Balance accounts frequently (depending on experience
& comfort level)
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17. Daily Money Management in a
Changing Economy
When you have money challenges, you may see or be tempted
by various schemes or methods to solve your problems, but
the answer usually is:
• To be more aware of your money spending patterns
• To balance your spending and lifestyle choices with inflow,
savings goals and debt levels
• Translate this balance to spending priorities
• Spend less (sometimes temporarily)
• Strive to save more
• Be careful with using credit
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18. Daily Money Management in a
Changing Economy
It’s all about being thoughtfully
economic and foresighted, and
realizing the resulting benefits
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19. Daily Money Management in a
Changing Economy
Expense Priority Levels Purchase
Identified
Must: required purchase, time
dependent Yes
Is Purchase
an Option? Can
Need: also required purchase, but
No
timing is flexible
Is
Purchase No
Need
Can: purchase & timing is optional Time
Dependent?
Yes
Remember: You have some control
Must
over the amount of all expenses
when you make a purchase
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20. Daily Money Management in a
Changing Economy
What is the One Number Mindset?
• A daily money management method that allows you to
focus on one continually adapting number on a daily
basis to manage your money
• The One Number is basically your inflow minus your must
expenses
• Provides you with a mental picture of your money
situation and can be tracked with notation or mentally to
approximate
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21. Daily Money Management in a
Changing Economy
Monthly Expenses
Musts Needs Cans
The One Number Mindset Method
1. Prioritize your monthly,
quarterly and yearly expenses
(similar chart)
2. Forecast your expenses (with
monthly allocations for more
periodic expenses)
3. Manage Daily
4. Maintain Monthly
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22. Daily Money Management in a
Changing Economy
Monthly Expenses
: Total Inflow*: : Total carryover from : Total carryover from bottom
bottom of must column of need column
Musts Needs Cans
Expense Amount Expense Amount Expense Amount
3
Monthly
forecasting and
One Number
determination
Monthly allocations for Monthly allocations for Monthly allocations for
quarterly or yearly must quarterly or yearly need quarterly or yearly can
expenses (from Worksheets 2 & expenses (from Worksheets 2 expenses (from Worksheets 2
3) & 3) & 3)
: Total : Total : Total
 minus  (carryover to  minus  (carryover to  minus 
Primary top of need top of can (reallocate any left over
Number column) column) amount to musts)
*Assumes safety factor (10-15% of typical monthly inflow) is already established as a base in the primary account.
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23. Daily Money Management in a
Changing Economy
Key questions to ask before a purchase:
• Is it a must buy, or just a need or can? (i.e., discretionary)
• Is it a must buy right now?
• What level of purchase do I actually need? (vs. what I want)
• Are there alternatives for what I really need?
• Can I pay cash or pay it off immediately?
• Can I save for it before the purchase? (also gives time to
reconsider)
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24. Daily Money Management in a
Changing Economy
Short-term cash building strategies:
• Buy everything with cash
- if you can’t, don’t buy
• If you can’t pay cash, at least buy on your own terms (i.e.,
don’t charge it unless you can pay it off)
• Live on basics, minimize excesses & conveniences (e.g.,
buy basic foods/clothing, reduce or eliminate cable/cell
phones/subscriptions, do more yourself - laundry, lawn
care, etc.)
• Downsize or deluxurize your life - smaller car, smaller
house, fewer conveniences (above), etc.
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25. Presentation Review
• The economic climate is continually changing
• Our personal financial needs will change
• Personal money management must be continually adaptable
• Only you can effectively manage your own spending
• Traditional budgeting methods do not provide adaptability
• Some of our largest personal expenses are not monthly
• The One Number Mindset method provides adaptability
9/4/2011 © 2009 Wavefront Management Company, LLC 25

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27. Example: Debt Payoff
Options in Planned Period
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28. Example: Debt Payoff Options in Planned Period
Assumptions: $5000 in credit card debt
$1000 in discretionary cash each month after Must expenses
$100 per month in interest charges for first 3 months (for simplification)
$50 per month for the next 3 months (for simplification)
No additional debt charged during period
Payoff Scenario 1:
Pay $1000 per month toward credit card, put $1000 in savings thereafter
Period Credit Card Debt Savings
6 months later $0 $550
12 months later $0 $6550
$450 used for interest charges in the first 5 months.
Note: This example is for illustration purposes only and not meant as specific advice or to represent any particular situation
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29. Example: Debt Payoff Options in Planned Period
Assumptions: $5000 in credit card debt
$1000 in discretionary cash each month
$100 per month in interest charges for first 6 months (for simplification)
$50 per month for the next 6 months (for simplification)
No additional debt charged during period
Payoff Scenario 2:
Pay $500 month toward credit card, put $500 or any additional discretionary per
month in savings
Period Credit Card Debt Savings
6 months later $2600 $3000
12 months later $0 $6100
$600 used for interest charges for the first 6 months, $300 for the next 6 months
Note: This example is for illustration purposes only and not meant as specific advice or to represent any particular situation
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30. Example: Debt Payoff Options in Planned Period
Comparison
Pay $1000 per month toward credit card, put $1000 in savings thereafter:
Period Credit Card Debt Savings
6 months later $0 $550
12 months later $0 $6550
Pay $500 month toward credit card, put $500 or any additional
discretionary per month in savings :
Period Credit Card Debt Savings
6 months later $2600 $3000
12 months later $0 $6100
Cost difference is $400
Note: This example is for illustration purposes only and not meant as specific advice or to represent any particular situation
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31. Example: Debt Payoff Options in Planned Period
The Key:
Have a plan to pay off debt within a fixed period of
time, and eliminate or significantly reduce debt accrual
during that time
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