Unit 1 · Level 1 · Where your money goes
The gap is the whole game
Money comes in. Money goes out. What is left over is your gap. That gap is the only money that can ever reach a savings account, a bond, a fund or a share. If you take home €2,400 a month and spend €2,400, your gap is zero, and no strategy on earth compounds zero. Everything else in this course exists to protect that gap or make it wider.
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What you get asked
Ana takes home €2,000 a month and spends €1,850. Bruno takes home €5,000 and spends €5,000. Who has money that can reach a market?
A market can only act on money you actually hand it. Bruno's €5,000 is impressive and entirely spoken for. Ana's €150 is small and real. Income sets the ceiling. The gap sets what actually happens.
You take home €2,300 a month and your spending totals €1,940. What is your monthly gap, in euros?
€2,300 minus €1,940 is €360. That is the entire raw material you have to work with this month. Over a year it is €4,320, before a single cent of growth.
Your gap is income minus spending, so it widens when income rises or when ___ falls.
Two levers, and only two. Earning more and spending less both widen the same gap. Most people can move both a little, which usually beats moving either one heroically.
Put a normal month's money flow in order, from first to last
Notice where the gap sits in that queue: last, made of leftovers. That position is why most gaps stay small. The final lesson of this unit moves it to the front.
Why do experienced savers say a pay rise on its own does not guarantee a bigger gap?
It is called lifestyle creep. The raise arrives, the flat gets nicer, and the gap ends up roughly where it was. A raise only widens the gap if you decide in advance where it goes. 🐜
The rest of this unit
The gap between what comes in and what goes out is the only number a market can ever act on.