🤑 Tracking every expense for a year: lessons learned
A beautiful hot chocolate in Barcelona that I definitely did not hesitate to spend money on!
December 26, 2020
Happy Boxing Day friends :) I hope you don't fall victim to the seemingly good deals and impulsively buy things you don't need. 💰 Another fitting post for December 26 all about what I've learnt through the past few years of tracking every single expense.
I only started taking my spending and saving seriously once I started full-time work in October 2019 because before that, I was just trying to have enough money saved during my co-op term to pay my tuition, rent, travel and weekly bubble tea expenses for the next semester. I knew that once I started full-time, I wanted to have a clear picture of what I was spending, and if it was aligned with my goals. Around the same time, I stumbled upon the whole FIRE (Financial Independence, Retire Early) movement which peaked my interest so I was more motivated than ever to not make any frivolous purchases.
I know that there are great apps to help with the tracking process, but I lowkey enjoy the routine of spending a few minutes on the weekend to pull up my credit card transactions and menially enter everything onto Google Sheets.
In my post about saving money, linked here, I shared a snippet of the goals I have for myself and one column in my tracker is to truthfully answer if that purchase was aligned with my goals. Obviously, I have had my fair share of weak moments, and almost every purchase from Coco or Chatime has a sad red "No" in the goals column - but that's okay, I've gotten so much better since last year and have rarely purchased anything in 2020 that I didn't fully support.
Having a long list of all our expenditures is nice, but it's only when we aggregate and run some statistics do the numbers become meaningful. I keep it simple by summing all the expenditures by month and then computing the percentage saved and the percentage spent (in relation to my monthly salary). I then compute the quarterly and annual averages of the percentages saved and that's it! Super simple but very insightful.
For example in Q3 2019, I saved on average 65% of my salary compared to 2020, where I've saved 91% (thanks COVID).
Now the point of tracking or calculating these statistics is not to become stingy or adopt the mindset of "I can't spend X on Y because I'll have to record it on my tracker". Instead, by having financial goals, we become more mindful of our purchases and really think through before mindlessly buying.
As a personal rule, if I really want something, I conduct extensive research on it and then wait for a few months or even a year to notice how often I think about it or if I can really see a need for it in my daily life. Usually the answer is no, and I end up forgetting about it.
Since my tracker also stratifies the expenses into categories and detailed descriptions, I can easily see how much money I'm spending in certain areas (i.e. clothing, coffee, smoothies). For example, from October 2019 to now, I've spent $48 at MosMos (the best coffee shop in Toronto) - this is not exorbitant but has made me more motivated to recreate my favourite drinks at home instead for less. (see above for my matcha oat milk boba, green juice and chocolate monkeys)
All these small expenses add up and I hated looking back after a semester wondering where all my co-op earnings had gone, but now, I'm so much more comfortable and confident with my money and how it's being spent.
Call me a dork or well prepared, but I've already set up my 2021 formulas to reduce the monotonous work for myself next year 🤣
What's one money habit you've found helpful or are trying to implement?
Sending you lots of light and love,
-Reina xo