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How to solve this personal life case problem?

BCG Bain McKinsey
New answer on Jul 21, 2020
4 Answers
882 Views
Jimmy asked on Jul 20, 2020

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?

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Best answer
Sidi
Expert
replied on Jul 20, 2020
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 350+ candidates secure MBB offers

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

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Clara
Expert
Content Creator
replied on Jul 20, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

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

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Ian
Expert
Content Creator
replied on Jul 21, 2020
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

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"

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Robert
Expert
Content Creator
replied on Jul 21, 2020
McKinsey offers w/o final round interviews - 100% risk-free - 10+ years MBB coaching experience - Multiple book author

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

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Sidi gave the best answer

Sidi

McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 350+ candidates secure MBB offers
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