I’m about to tell you a tale of financial overwhelm, and then another of how to Overcome Money Overwhelm. You are probably already participating in your own GPD calculations right now and don’t even know it. Well, at least some form of it any way.
If you’ve been listening to the news lately, there has been a lot of talk about GDP. What is a GDP any way? I don’t know what the hell it is either. The easy definition of the Gross Domestic Product (GDP) is a number that is suppose to represent the size of a countries economy, roughly.
Me personally, I think roughly is really the operative word here.
Boom. Check the, “I learned something new” box for today.
So the way that number is calculated represents all the goods and services produced in a measure of time (e.g., budget).
How is this helping me Overcome Money Overwhelm?
Don’t hang up yet!
You add up all the dollars of the stuff a country creates. It sounds so easy to calculate, right? The GPD is a measure of a final value, not counting production outside the origin of country. Which leads to the GNP (Gross National Product).
That happens when the US cuts down a tree and sends it to another country to turn it into a chair. The outsourcing would not be included in the GDP, but calculated in the GNP.
So, do you use the GDP or the GNP to measure the size of the country? Even if you have a strong GDP number on paper that does not necessary reflect the real health of a nation, because of the labor per capita. Thus, the per capita product (PCP) comes into play.
True event follows:
Me: Son, what do you want for your birthday?
Me: What, you want to go to China?
Son: No, I want China. Everything is made there. It says so on the bottom of all my toys.
So, China may look like a GDP power house; after you calculate the economical value per person (PCP) shit get’s real ugly.
Now, where am I going with all this?
In a story I read, How Fast Did The Economy Grow? Forecasts Are All Over The Place, New York Fed economist Andrea Tambalotti says, “the economy is enormous and ultimately unmeasurable.”
Why in the hell does that make me feel so good?
Because it goes to tell you that even the economical professor or the top dogs of all things giving good value or service in relation to the amount of money, time, or effort spent, know: no one really knows for sure. It is intelligent speculation as pointed out below.
1. You are trying to do it all when ultimately you’re best is good enough.
Simply put, done is better then perfect and probably a good indicator of what is going on with your budget. Could you improve? Probably. We all have room for improvement. One way to overcome money overwhelm is to gather all your data (e.g., debt and income) and see the sum. Subtracting your debt from your assets is the first step to managing it all. It is also called your net worth. This is the health of your money and probably looks better on paper then it feels like in life.
This can be a notepad or a spreadsheet. It is up to you. But keep in mind, even the guys driving the indicating numbers to predict our nations health go back and revise the numbers. Atlanta Fed economist Pat Higgins reminds us, “All these forecasts should be seen as an imperfect baseline. Even the official GDP number released by the Commerce Department is intelligent speculation. And it will be updated as new data comes in.” Thus, don’t let incomplete data stop you from starting. You can go back and revise the data, which you can use as a reference point as you grow with the data. Again, done is better then perfect here. Input the data and modify it as needed.
3. Thus, don’t be afraid to revisit the numbers, again and again.
If anything, expect to. I am a big proponent of knowing where all your money is going. Thus, dividing monthly income into monthly debt should equal one. Then you know you have accounted for all your spending. But we all know Rome was not built in a day. Nor is a good budget. So, breathe (and take it easy on yourself). You are not an economist or expected to be one, but rather a good steward of your money. Knowing you are revising your numbers as you can is a big deal and a continual effort. And remember, our economy has been in a recession without the government even knowing it until we were already in it!
4. Use all the tool necessary to track your progress.
Sometimes that means incorporating things like PCP, mentioned above, to get a better picture. A simple budget can use an assist from time-to-time. For a mom that might just look like utilizing an credit card amortization calculator to mark progress. If you worked hard to improve your credit score and took out a personal loan to consolidate debt, you need to know how the interest and minimum payments will affect your budget too.
Above all, just begin.
We all feel overwhelmed by money at one point or another in our lives. Getting a handle on the whole picture is the big win. It is going to take collecting a lot of data up front. But once it’s done, the hardest part is over. Knowing your credit score will help too, so check out some ways to get your credit score for free! Tackle how you are going to track your spending and create a budget. This will give you peace of mind when everything else is spinning out of control. Remember to stay in touch with the health of your budget. If the numbers aren’t 100%, revisit them overtime to avoid overwhelm; do your best to avoid a fall in two successive quarters. By definition, avoiding a recession. And if you find a new tool that compliments your range of financial vision, put that baby in your wheel house. A good budget can always use an assist.
If you have tips and tricks to share, please don’t be shy, comment below!