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Financial Areas of Improvement

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We all have areas in our finances where we can improve.  Identifying these areas is an important way to keep your finances on track and maximize your current income.  If you can bring yourself to do it every couple of months, then you’re on your way to a great habit.

In case you are unsure what I’m talking about, I’m basically saying that you take a look at all of your incoming money, and outgoing money (inflows and outflows) and you figure out where you can improve the efficiencies to get more mileage out of your time and money.

A good way to picture this is a sink.  The water coming out of the faucet is your income (inflow) and the drain (outflow) is your bills, and other obligations.  If you can turn your water on full blast, and close the drain as much as possible, eventually the water (your money) will fill up and overflow.

My Assessment

I did an “areas of improvement” analysis on my inflows and outflows.  That’s a fancy way of saying that I sat around and thought about what I could do better.  What could I do to increase my inflows and decrease my outflows?  Some things that I realized were:

  • I didn’t take meaningful advantage of overtime at work.
  • I could lower my travel costs & time for my daily commute.
  • I don’t take advantage of recycling cans.

Yes, I even got down to the really specific things like recycling!  It’s not mandatory in my area, but I could easily make a little money with just a few seconds of effort.

Overtime At Work

At my place of business, we basically have free reign on overtime, within reason.  At best, I was taking about 1 hour a month which isn’t much.  There is a lot of opportunity in this area to increase my inflows by increasing my immediate income.  I like this opportunity.  The obvious downside is going to be an increased amount of time at work.  Ironically enough, opportunity presented itself in the next area about my commute.

Commute To & From Work

My commute to and from work is right in the meat and potatoes of rush-hour traffic.  This means that my commute is greatly extended just because of the times that I’m driving.  If I were to get on the road 30 minutes earlier, and leave work 30 minutes later then I could avoid a bunch of time idling on the highway.

This will save me about 30 minutes each day in commute time.  That’s 2.5 hours each week worth of gas and time that I’ll save, all because I didn’t leave when everyone else was.  Additionally, that gives me an extra 75 minutes of over-time at work each day (30 minutes for leaving early, 15 minutes in saved drive time to work, and 30 minutes for leaving work later).  Talk about two birds with one stone!

Recycling Cans

Recycling isn’t mandatory in my area.  I’m very supportive of recycling efforts and recycle plastics wherever possible.  I noticed that I was missing an opportunity with soda cans.  Any time that we host a get together, we are typically left with quite a few cans.  It doesn’t take a lot of effort to crush them, store them, and transport them to a local recycling plant who will pay us by the pound.

Now, some people might bust out the calculator and start talking about opportunity cost but there are a couple of reasons that I don’t care about opportunity cost:

  • Recycling has an incalculable value to our environment.
  • I don’t calculate opportunity cost for my free time.  If I’m not skipping work to do something, then I don’t calculate opportunity cost.  I’ve met some people who obsess so much about opportunity cost that I’m surprised they will allow themselves to sleep at night.
  • I could be out doing something that costs money, or I could be crushing cans and earning money.  I know those aren’t my only two options, but for many people, if they aren’t making money, they’re spending it.

The Basic Idea of Areas of Improvement

The idea is to continually fine tune your finances.  We all get sloppy, and a periodic examination will help us get things back on course.  You can be as broad or detailed as you want to be.  In the end, your goal should be to maximize inflows and minimize outflows.  If you do it well enough, then your finances should overflow.

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