These are the most USEFUL personal finance metrics that are never talked about. The concept is simple: Fixed vs. Variable Expenses Your ‘fixed expenses’ are those costs that remain relatively constant each month. They're predictable and don't change much over time. These are the bills and expenses you can expect to pay the same amount for each month. Examples: - Rent / mortgage - Car payment - Utilities - Insurance - Subscriptions - Other loan repayments Your ‘variable expenses’ are the costs that fluctuate from month to month. These expenses depend on your usage or consumption and can vary widely, making them a bit more unpredictable. Examples: - Travel / vacations - Eating out - Entertainment - Gas - Shopping - Donations - By understanding your fixed and variable expenses you can better manage your money and plan your spending. Let’s say you want to figure out how much cash you’ll be left over with at the end of the month for your variable expenses. Here’s how you could quickly figure that out: (Current bank balance) + (Expected income that month) - (Fixed expenses) = (What’s left over) What's left over will be your budget for your variable expenses. It's recommended to add a buffer for savings/investments that automatically gets added to your fixed expenses as well. Figuring out what you’ll have left over at the end of the month before the month begins is a HUGE tactical advantage because most overspending problems are caused by not understanding what you truly have to spend. The root cause of overspending often comes from poor cash flow management. Most people when they run low on money, will slow their spending. The illusion of having a surplus of money and not realizing the debts & bills you’ve already committed to paying causes overspending in the variable expense categories that could be prevented.

Business finances can be scary Let me break down the most important report (The Income Statement) so a second-grader could understand it: The Income Statement tells you whether or not you’ve made a profit over X period of time. It also shows why or why not. The formula: Revenue - Expenses = Profit Expenses are then broken down into 2 broad categories: 1. Cost of Goods Sold (COGS): these are costs related directly to the sale 2. Operating expenses: These are the overhead costs to run the business, but not directly related to revenue The income statement will help you tweak high-leverage variables: - Identify how much revenue/profit you bring in - Identify the leading causes of your situation - Understand your products margins and where you can cut costs or raise prices Boom, simple as that

My two rules for an abundant life: 1. Give more than you take 2. Spend less than you make Here are some other honorable mentions though: - Avoid consumer debt - Spend money for knowledge - Spend money to keep your time free (time gets more important as you make more money) - Avoid paying full cost for anything (and always try to negotiate) - Try not to borrow money at all if you can avoid it, but if you do, ONLY borrow money to make money - Learn skills that earn money - Use the skills to generate one killer income stream that produces you more than your time is worth - Use the extra money you make to then buy multiple streams of income - Track your finances, it creates awareness