Do You Know the Score? (Of Your Money Game)

You're running late to a game night party and you show up half way through the second quarter. When you walk in, the first thing you ask is, "What's the score?"

If your life was a football game, you'd for sure know when to go for two and when to punt. The trouble is, its hard to keep track of the whole game without a scoreboard.

Your Money is the Game

Let's see, you have three checking accounts, two savings accounts, and numerous credit cards, so many you can't count them all. You think, well, if I use an online aggregator, I can at least see all my balances all in one place. I should be all set because I will see the numbers.

Balances are Just Part of the Score

So you think you know the score? Not quite; your current bank balances only tell part of the story.

Your bank balances don't know that you've written a check for $1,536.23 that's in the mail and obviously hasn't yet cleared. Your credit card balances don't reflect the charges you made yesterday or the day before; besides, you ignore them anyway, because you're planning to make the minimum payment. Also, neither your checking accounts nor credit cards know of your upcoming expenses and bills that need to be paid for the rest of the month.

That's when you panic because you realize... I can't keep track of all my expenses in my head!

Getting Your Game Face On 

You know the electricity bill is due, you have groceries to buy, you need to pay rent, there's that birthday present, and oh yes, the car needs gas. What else could there be? 

Do you think by eyeballing your accounts and estimating your expenses in your head you know if you'll have enough money to make it to the end of the month? I would bet you don't. There'll be something you left out, or something you didn't estimate correctly or something that comes up unexpectedly, like the car needs $400 worth of work from the shop.

So, What's the Score?

You really don't know. And the score is so easy to come by and so easy to know. There is just one number you need: your Liquid Number.

The Liquid Number

You take what you have:

your cash, money in checking accounts, plus what you're about to get paid

and subtract what you owe:

your full credit card balance and all your upcoming expenses, including anything your wish list

We call this score your Liquid Number. This is what you'll have at the end of the month when everything is paid. With it, you're prepared for the future and you know how much of an emergency fund you've got. Its the real way to understand where you stand.

Have you been trying to keep track of things in your head without knowing your Liquid Number?