Run the Numbers

Run the numbers summary:

• Running the numbers means doing the math to judge the potential outcomes of a financial decision.

• You could run the numbers to figure out if a loan or investment makes sense for your budget and financial goals.

• A car loan lender or a home loan lender might run the numbers to find out if you can afford to repay a loan before approving your application.

Run the numbers definition and meaning

Running the numbers means checking the math, often to find out if you can afford something or if it makes financial sense. For example, you might want to run the numbers to see if you should make an investment, refinance a loan, or pursue debt relief. On the other hand, a lender might run the numbers to evaluate your application and whether you can afford to repay a debt given your income and current expenses. 

Key concept: Putting real math behind your financial choices so you can move forward with confidence.

More on run the numbers

Running the numbers means using math to evaluate the potential outcomes of a financial action, such as investing in something or buying something. Before making a financial commitment, people often run the numbers to make sure the purchase or loan fits their budget. That way, they can feel more confident about the decision.  

Running the numbers can tell you in a concrete way if your financial decisions are affordable today and for the future. 

Key features

Here are the key characteristics of running the numbers for a financial decision:

• Calculate affordability. Compare the cost of something (a purchase, loan, or investment) to the money you have available.

• Look at income and expenses. Review your budget to understand if ongoing payments fit within what you earn and spend.

• Consider interest and fees. Factor in how borrowing costs or extra charges affect the total price over time.

• Weigh the options. Test different scenarios (paying in cash vs. financing, short-term vs. long-term loan, etc.).

• Check the long-term impact. Look beyond the upfront cost to how the decision affects your future financial stability.

• Make informed decisions. Use the numbers to make your decision based on whether a choice is realistic, sustainable, and beneficial.

Types of running the numbers

In many situations, you might want to run the numbers to understand all the different financial aspects and possible outcomes. Here are some common types:

• Evaluate an investment opportunity

• Analyze economic data

• Understand how much a purchase will cost

• Evaluate whether someone qualifies for a loan

Whenever mathematical calculations are performed for more information or to provide insight into a decision, this is considered running the numbers. 

Real-life examples of running the numbers

Here’s what running the numbers could look like in some everyday situations, like buying a car or applying for a loan. 

• Ethan wants to buy a new car. Before he heads to the dealership, he decides to run the numbers. He checks his savings account and realizes he has $6,000 available for a down payment. Then he looks at his monthly budget and calculates that he can comfortably spend about $400 a month on a car payment without cutting into grocery or rent money. At the dealership, Ethan compares the total price of the car he wants, the down payment he can afford, and the monthly loan options. By running the numbers ahead of time, Ethan knows which cars fit his budget and avoids getting in over his head.

• Hannah applies for a $15,000 personal loan to cover home repairs. The lender reviews her application and runs the numbers by looking at her income, monthly expenses, and credit history. They calculate Hannah’s debt-to-income ratio to figure out if she can handle the new payment, and they check her credit score to assess how she’s paid back past debts. Once the lender knows that Hannah has steady income and a manageable level of existing debt, they approve the loan with a repayment plan that fits her budget.

In both situations, someone performs mathematical calculations to evaluate a specific decision or to figure out if a given outcome makes sense.