The One-Number Budget: Why Traditional Budgets Fail and What to Do About It

by John W. Crane

The problem with snapshots is that they only mark one moment in time, and there’s always an outlier expense that throws the whole thing for a loop. This isn’t your fault. It’s just how life works.

Once you have a clear picture of your Human Life Value, you have two jobs: protect it and grow it.

In reality, 56 percent of workers over age 50 lose their jobs through no fault of their own.

Each year of income you earn right now has to pay for two years of living—one for your current self and one for your future self.

I’ve been advising people for a long time, and over the years I’ve learned that if you consistently save 20 percent of your income over a period of 20 to 30 years, you put yourself in the best position to avoid money problems.

My experience working with clients has shown me time and again that if your housing costs are much more than 15 percent of your total income, you’ll struggle to meet your savings goals.

Your One Number covers everything you need to live—and I do mean everything. I’m talking about: Electricity and other utilities Food Clothing Cars Vacations Electronics Credit card debt College tuition Hobbies And anything else you want or need. Instead of worrying about every little receipt, you just have to make sure your total monthly spending falls within your One Number. That’s it. If you can do that, everything else automatically works, and your wealth building for retirement is taken care of.

Writer and former Yahoo executive Tim Sanders has a saying that really resonates with me: “Education without application is just entertainment.”

Cash flow management is the most important part of your financial life. There’s no two ways about it: you need to master this skill to make sure that your money mountain is evenly spread over your whole life.