Two Sides of a Dime (00:00)
Over the last five years, I have worked with hundreds of women that have been able to pay off thousands of debt, save, invest six figures. And one thing that these women have in common is that they have a surplus. So a surplus is money that you have left over after you have covered your living expenses. And in the last episode, we talked about one of the first milestones that you should be hitting.
in your financial journey is getting to 30 % surplus. So in today's episode, we're cover everything about your surplus, why everyone needs to save 30 % surplus of their income, how to get there, you.
So to get started, you want to first of all figure out what is your surplus? So you want to take a sheet of paper and calculate how much it costs you to leave every month. So how much are you paying for your mortgage or rent, your utilities, your food, your transportation, your shopping? You want to put things like going out to eat, because a lot of people forget that. You want to put things like your fun, your personal care, put all of that into this sheet of paper.
A good place for you to start will be to go through your statements and figure out how much you are spending every month. I know for your fixed bills, it's a little bit easier for you to figure out how much you're spending because they're fixed bills. But when it comes to your variable expenses, like you're eating out, your food, your gas, it might be a little bit confusing. So you want to kind of take averages. So see how much you've spent in the last three months and take the average of that. Another thing you can use is chat GPT if you feel comfortable doing that.
you can take screenshots of multiple statements and then just ask you to do an analysis and tell you how much you spend on average on food, shopping, and you might even find some hidden things that you don't necessarily put in your budget, but you typically spend on because for some reason, a lot of us don't like to put everything we spend on in our budget. So that could be a good tool for you to use. So once you figured out what your expenses are, you want to now at the top,
Note your net income. So this is how much you take home every month. This is not your gross income, okay? Because we don't care about the gross income. A lot of that money is taxes and we don't get to see that money in our account. So we can only work with the money that hits our account. So take your net income. And then if your income varies every month, you want to also be looking at your average income as well. So look at the, maybe the last six months,
take all those different incomes that you made and then figure out the average. Then you want to take out your expenses from your net income. So net income minus expenses, whatever you have, that number is your surplus. So once you figure out your surplus, the next thing you wanna do is to calculate your surplus as a percentage of your net income. So you take your surplus, divide it by your net income,
and then multiply it by 100. So for example, let's say you bring home $8,000 and your expenses come up to around $6,000 per month. Your surplus will be 8,000 minus 6,000, which is 2,000. So every single month you typically have around $2,000 left over. Now you want to figure out what that is as a percentage of your net income. So 2,000 divided by 8,000, then you multiply that by 100, that would give you
25%. let's talk about why this math is important. It's important for you to not only have a surplus, but for you to have enough surplus. Just having a surplus is not enough. For somebody, that $2,000, they're like, oh my God, $2,000 extra, that's a lot of money. You can do so much with that. But for somebody else that has a really high mortgage, they're living in a very high cost of living area, that $2,000 will not even cover a small emergency if something were to happen.
So for some people, $2,000 is a lot, some people it's not a lot. So we wanna figure out what that number is as a percentage of your income. That's why I use percentages and not just the dollar amounts. So we wanna be able to know if we have enough surplus. Wanna know that we can handle small emergencies, even small to medium emergencies. If you find that there are things that tend to come up in the middle of the month,
and you either have to put it in debt, you're going into overdraft, or you're having to rely on like a line of credits, or even taking money out of your savings, then you don't have enough surplus. This is important because if you're always in this stage, you're always going to be financially strained. You always say like, oh my gosh, you just never have enough to get by. Why are things always breaking? Why is life happening to me? You're always going to feel in that place in your finances. And the reason is because you don't have enough surplus. You also need
to be able to do the things that you want because we're not just supposed to pay bills and die, work, bills and die. We wanna be able to travel. We wanna be able to buy our dream home. We wanna be able to invest for retirement and pay off debt. You cannot do any of these things if you do not have a surplus. So without a surplus, you're not going to ever get to the place where you achieve financial freedom. That's why this number is the most important number that you should be calculating and figuring out
as step one in your financial journey. So how much surplus do you really need and where does it really start to matter? Okay, we're gonna look at different brackets. If your surplus is at 0 % or negative, then it clearly means that your expenses are more than your income. And at this stage, there's literally nothing else you can do other than just increasing your income. Because if you're already in the negative,
no matter how much you try to like tweak your expenses, maybe you get an extra $200 here and there after you've cut out your subscriptions, that's not going to move the needle for you. So what you really need to focus on is increasing your income. And I like to do this math because it's really a good place for you to start and figure out, okay, how much income do I really need to be making?
So basically at this point, you already know you need to increase your income by 30%. And you should not be looking at jobs that will not give you 30 % surplus. And by the way, this is net income. So you have to do the math for what the gross should be. So this is an exercise I like to do with clients that I work with when we figure out that they have an income problem. We'll be like, okay, well, right now you're making $80,000. What you really need to be making is $120,000. And that's the goal that we start working on.
We start thinking, okay, what are some career paths that we can work towards that will get us to that 120K? So if you feel like you're at a 0 % surplus, all hope is not lost, okay? Now you have information and you can use that as a strategy to know what to start working towards. If your surplus is between 1 to 15%, your surplus is too small. It's not leaving enough room for you to handle emergencies when they come up.
Like I said earlier, if you find yourself in that situation where sometimes you send a little bit of money towards your savings and then two business days later, you're like moving that money back into your checking account or maybe you plan to do $300 worth of groceries and then you ran out of something and you need to go and buy it. And now your budget has come up to $400. But now because you've run out of money in your checking account, you need to take money out of your savings.
So you're in that cycle of revolving money where you send some money to what you're saving to take it out. Or maybe you pay off the credit card and then something else comes up. You have to put that on the credit card again and then try to pay it off the next month and then put it back on the credit card and pay it off the next month. But if that cycle never ends where you just feel like there's no breathing room, you know what would give you that breathing room? A surplus, yes, a surplus. When you have a surplus, you have breathing room.
So that if these like little medium inconveniences come up during the month, your car breaks down. Sometimes you don't necessarily want to tap into your emergency fund or emergency back home comes up or something happens at your kids school. or you have a pet, these emergencies happen. So you wanna make sure that you have enough wiggle room in your income to handle any kind of small emergency that come up. And on top of that, you wanna be able to
put money away and leave it alone, especially when you have long-term goals. So if you are saving for a house, ideally you want to put that money into your savings account and leave that money alone and not keep taking it out every five business days. If you have a goal to travel, you want to be able to put that money aside and leave it alone. If you have goals where you want to invest, you want to be able to do this. Now, if you are around that one to 15 % surplus, you're not going to be able to handle multiple goals at once. So at this stage,
You want to really analyze and ask yourself, where is the issue? Do I have an income problem or do I have a system problem?
So this is where you want to start analyzing. Maybe my income is fine, but I'm just spending way too much money. Maybe I need to adjust my grocery budget. Maybe I need to adjust my insurance of one or two things that you can adjust in order to see that surplus jump. And then the next range is between 16 to 29%. At this stage, you are at a healthy surplus. You can save, you can invest, you can pay off debt, but it might take you a little bit longer to get there.
Let's look at the 8K income. A 20 % surplus is around 1600. And if you have goals of investing and reaching financial independence, that $1600 alone is what you would need to be putting into your investments. And you will not have enough to save if you have debt, you will not have enough to pay off debt. If you were saving for a house, it's gonna take you ages for you to get there because you don't have sufficient surplus. So yes, you're in a good place.
where you can handle those emergencies when they come up. You have a little bit of wiggle room to fight the fires without burning out. But in order for you to get your long-term goals it might take you a little bit longer, especially if you're someone that has big goals that you wanna reach quickly. And then the other range is 30%. So 30 % or more is really where you want to be because this is where you really start to experience a financial freedom.
You can handle those medium emergencies when they come up. You can save and leave it alone. You can invest and leave the money alone. You're not needing it every five months. You want to take money out of a TFSA because something came up. Or you want to take money out of your RRSP because something came up. You're no longer in that stage. You can actually leave the money alone and you can start to do things that you enjoy. You can book trips. You can go on vacation. You can actually see your money start to work for you. So that is why I always...
advice a lot of people to really work towards getting to 30 % surplus because at this stage you're no longer in survival mode. You no longer feel like, my gosh, life is just hard. I'm feeling so financially strained. Every single time I have a little bit of extra money something comes up and takes that money away from me. Because at this stage you've had months where you've been saving and leaving it alone. So you have an emergency fund.
or you've been investing for a while, you have investments, they've probably grown to six figures because you've been doing this for a while. You've paid off debt because you have extra money to send towards your debt. So you're no longer have debt that is hanging over your head and keeping you strained. So this is really a stage that you want to work towards if you really want to see that financial freedom. I really want to start thriving with your finances.
And this is the stage that most women in the Surplus Stack Society are at. So one of the biggest goals that we work on inside the Surplus Stack Society is getting to your 30 % surplus. And we usually aim to get to that 30 % surplus in 30 days. So we go gung-ho on it. What do we need to do to get to 30 % surplus? The good thing is that a lot of people that come into the Surplus Stack Society, they're not necessarily in that 0 % or 1 to 15 % range.
Most of them are reading that 15 to 30%. So it's just a few tweaks in terms of their system that we need to adjust for them to see their surplus jump. So the question is, how do you increase your surplus?
So if your surplus is below 15 % mark, you have an income problem and you need to work on increasing your income. There is no amount of cutting back that will be sustainable enough for you to thrive on that income. If you downsize on housing or move back in with your parents yeah, you'd be okay for a while. But if you went and got back into an apartment or you bought a house, will go back to square one where you are now financially strained.
all over again.
So you need to make sure that you are working on your income before anything else. So one of the ways that you can analyze if you're underpaid is to actually look at how much surplus you have left over after you've covered your bill. Especially if you're somebody that has a very low or moderate lifestyle, you're not living lavishly, you're living like every other person and you're finding that you're not having enough surplus, then you are not getting paid enough.
So if your pay is not allowing you to keep at least 16 % of your income, at least 16%, you are not earning enough and you need to start working towards increasing that income. that means you have to change employers or you have to pivot completely into a different industry, whatever steps you need to take in order to get there.
That will be your primary focus that you'll be working on your money goals. Because if you're saying, ⁓ I want to start saving, I want to start investing, yes, you're to put $500 this month, but it's going to take you another six months for you to save anything. And you'll be wondering, my gosh, why am I not making progress? So just take all of that energy and focus it on finding ways you can increase your income.
because applying for a job these days is like a full-time job. You need to apply to multiple companies. You have to do interviews So you have to focus all your energy on making sure that you are increasing your income. And then if your surplus is between 16 to 30%, you might have a system problem. So most people don't have a spending problem, they have a system problem.
And you need to have a clear system to see where your money is going before you can diagnose your problem. a clear money system will tell you how much you're making. It will tell you what your surplus is, and it will also tell you what you're spending. But it should be able to tell you what percentage of your income is going to each category of your expenses. this then allows you to see where a bulk of your income is going.
inside the Surplus Stack Society, we have the Surplus Stack System, which is our spreadsheet that we use for everything with our finances. It allows us to do our budget, our debt, our investment planning, our track our net worth, our goals, everything. It tells you everything about your life. with the Surplus Stack System, you're able to see the different categories of your expenses. for example, something like housing, you can see what percentage of your income is going towards housing, what percentage of income is going towards transportation, food.
childcare, et cetera. And then once you've done that, you wanna sort through it. go from highest to lowest.
you might notice that, my gosh, my housing is like 50 % of my income. Well, if that's the case, you're not gonna be able to do anything else if your housing is already taking half of your income. So you might be like, okay, my housing is the biggest issue. The problem is that a lot of people try to cut back on things like their subscriptions. Well, you're saving $12 a month. I don't know what that's gonna change. that $12 is not gonna make a dent on your credit card or your savings or investing. Yes, it does add up eventually.
but it's not going to make a dent. You need to be focusing on the main things that are taking majority of your income. So start with those high expenses. What can I do about my housing right now to reduce it? Figure out, do I need to downsize? Do I need to rent the basement? What do I need to do to reduce my housing costs as at this point?
So that becomes the next goal that you work on. And then maybe the next thing on your list could be transportation. That's usually the second highest category for a lot of people. You might look at it and be like, oh my God, this car payment is way too high. It's taking up 25 % of our income. Then you will need to adjust it or probably even get rid of it and downsize to something else that is not taking up majority of your income. But this is how you really diagnose the problem. And once you do this, you're able to clearly see
what needs to go and how much you can really increase your income by. So let's say your housing cost is 50%. You're like, okay, if we cut back on this, this, this, this, we can increase our income by 5%. Sometimes it might be things like your utilities or even your insurance, switching your home insurance providers. Those types of things can easily add up to 5 % and back into your surplus. So you've already increased your surplus by 5 % just by doing those small steps.
So you wanna keep going down the list, start with the highest. Those are the things that will move the needle, that will make the most dent in your finances.
So you wanna keep tweaking and tweaking and tweaking until your surplus has increased. And the good thing about this that you can actually play with those numbers on your spreadsheet even before making those calls or before reducing spending. Like, okay, if I reduce my housing costs by $200, how much of my surplus is gonna go up? If I reduce my transportation costs by another $100, how much of my surplus is gonna go up? You can just play around with it and be like, oh, at the end of the day, we can have an extra $1,000 coming back to us. But that's something you can keep doing until you fully.
increase your surplus to 30%. Now, if you notice that your expenses are already on the low side, then you might have an income problem. if you're looking at your expenses and be like, okay, you know what, my mortgage or my rent right now is actually really, really low compared to other houses in my area. Or you might be looking at your transportation costs and we only have one car and we don't even go out a lot when we're from home, so our transportation costs is low.
So at this stage, the issue might be working on increasing your income. like I said earlier, there's only so much you can cut back on and you might need to work on increasing your income at this stage.
So like I said earlier, inside the Surplus Stack Society, I have a system called the Surplus Stack System that it literally shows you everything about your money. It shows you what your surplus is and it shows you the different percentages that you have assigned to your different categories of expenses. It shows you how much of your income those expenses are taking and you're able to keep track of it every single month to know where your money is going.
Because for some people, you might have a surplus this month and then the next month you don't have a surplus. you really need to work on keeping that surplus every single month. it's a really good way for you to keep your money top and center. I usually look through my surplus stack system twice a month. I have a money routine where just before I pay myself, I go through how much I'm going to pay myself, what my bills are coming up to.
And then I see what needs to go where if I have additional expenses that I'm not doing my hair or I have to go to a friend's birthday, I add all of those expenses before I even pay myself. So I know exactly how much I need to pay myself. But then I'm also watching my surplus to make sure that I'm also sending money towards my savings, my investments. All those goals are still top of mind. you don't want to get into the habit of where when you have a new goal, you take money out of the money that should going towards your investment or savings.
It starts to flag it for you because, okay, now you've reduced your surplus. Your surplus is no longer 30%. It's now come down to maybe 10%. So that month you're like, okay, my surplus was not at 30%. I need to work towards keeping it at that number if I wanna work towards my goal. That's one of the beauties of having a system is that it clearly allows you to see where your shortcomings are. But if you keep going at it blind every single month, you're not going to know what you're doing.
A lot of times you think, I'm keeping to my grocery budget, or I'm keeping to my transportation budget, or my eating out budget. But when you actually put those numbers together, you realize that you've exceeded what you budgeted by almost three X or even sometimes 10 X. So really keeping that front and center is great. And for those of you that are typically scared of looking at your money, you don't know what to do. We have so many different ways to help you out. We have the money promenade.
which we do bi-weekly, which is our co-budgeting session. So you come on the call and there's no pressure to attend. You come if you have time, but we are actually working on our budgets together. So sometimes I will show my budget and what I'm working on towards that month and everybody pulls out their budget and does it on their own screen. And if there's someone that is having some issues, I can work on it together with you on that call.
especially if you're someone that always forgets to budget. You're someone that forgets to look at your expenses. It creates that room for you to always make sure that you're having that touch point with your money. And I also do money audits. So once a month you get a money audit. So you can send me your budget. I can look at it, tell you the areas that you need to tweak on. If you're having issues entering the numbers, I'm excellent at spreadsheets and I can do it on my end for you. Super easy. It really takes away that hassle.
because I know a lot of you are busy, you don't have time, but getting set up initially is really, really important to make sure that you are set up for success. So all of that will be available to you inside of the Surplus Stack Society when you join us. And of course we have the Surplus method, which is our on-demand course. It walks you through everything from creating a budget to saving, investing, paying off debt. And one of the things I love about what we do inside of the course that covers getting to a 30 % Surplus,
is I walk you through different stages and what to do in terms of reducing your expenses. We even have a challenge called the 30 % surplus in 30 days where we work on getting to that 30 % surplus within 30 days of joining. So there's so many fun challenges in there like negotiating bills, reducing your bills by a certain percentage to see who has the most amount of bills that they reduced in a given month.
I have scripts to help you negotiate bills if you're someone that is always scared of calling your providers to ask for a discount. I have a script for you. So everything is already available to you inside the Surplus Stack Society. So if you're someone that has a 30 % surplus, yes, the Surplus Stack Society is for you as well because we have other goals that we're working on like saving.
investing, getting to 100k invested and also getting to our financial independence and the place that we start with is our surplus. So the surplus is very, very important for us inside the surplus stack society because that is what we need to get to our goals. Without a surplus, we cannot work towards any of our goals. And if your surplus is not at 30%, I have all the tools to help you get there.
But I always say, if you feel like you at at 0%, I would really encourage you to work on your income before joining us because I don't have a lot of resources to help you in that area in terms of increasing your income or getting to a new career. So you want to really work on increasing your income first. Once your income is stable, once you have a consistent income, then you can join us because at this stage, now you have your surplus and you can start working towards other goals.
So if you are interested in joining us, you can join us at surplusstacksociety.com. And if you have any questions, feel free to reach out to me on Instagram at two sides of a dime or surplusstacksociety and send me an email contact at surplusstacksociety.com. I'm really looking forward to having you inside of the community
and supporting you on your journey to financial freedom. See you in the next episode.
