How to solve this personal life case problem?

Question

Like i want to increase my savings for next month.

Structure: Earnings - Spending

2nd layer: Earning (salary, side job, dividends)

Spendings(Food, Clothes, Rent)

What to do next? I should now state hypothesis?

Like the most real thing to do within a month is lower your spendings

And now i need to structure this also?

Answer 1

Hi!

It all starts with a proper definition of your objective and foucs metric. So what are you solving for? Real savings? Or rather positive cash flow (i.e., disposable money next month)?

If it is the latter, then on top of

increasing earnings (creating new income sources or increasing current income sources)
decreasing spendings

you can also

shift cash inflow from the future into the present (e.g., via a loan)
shift cash outflow from the present into the future (e.g., by deferring certain payments to the month after next month)

Cheers, Sidi

Answer 2

Hello!

Funny enaugh, one of the 2 "little business cases" that I had to solve with a McK Senior Partner in my final round was similar to this.

You should enrich it with details, in each node of the tree.

For instance:

"Let´s start with the income branch, in this case, with the purpose of increasing them. We have 3 sub-levers here: salary, side job and dividends. Taking the 1st one, salary, I can think of 2 ideas to increase it in the short term, such as X and Y"

Hope it helps!

Best,

Clara

Answer 3

Hi Alex,

Good start but not quite fleshed out enough. I approve of the structure (assuming you would fill it out more). What's missing is the hypothesis/logic.

Hypothesis doesn't necessarily mean "My hypothesis is that I can increase savings by spending less on eating out".

What it means is "I believe I can increase my savings by looking at quick ways to increase earnings AND looking at where I can reduce my spend. To reduce my spend, I need to identify what spend it table stakes i.e. has to happen for me to continue living at an acceptable level. Then, whatever isn't table stakes, I would look to identify if/how/to what extent I can reduce each of these"

Answer 4

Hi Alex,

ABS - always be structured. Even if it might look straight-forward and obvious in the first place - always have a structured approach. And communicate it well - having a structured approach doesn't help with an unstructured communication.

Hypothesis at the beginning of the case? Fundamentally wrong idea anyway, you can find a couple of recent posts on that in this forum.

Hope that helps - if so, please be so kind and give it a thumbs-up with the green upvote button below!

Robert