Personal Finance

What I Learned From Tracking Every Dollar I Spent For 1 Year

For the last few years, I can’t tell you how many attempts I made at sticking with a budget tracker. I’ve tried different apps in the past, to just just plain old Excel. Every time, I’d find an excuse that would justify quitting the tracker. Either the apps mis-categorized an expense, or there was a lag in updating the transactions. Excel was too inefficient to use, since I could only make updates when I was back on my computer. Etc. etc. But the truth is, I just didn’t want to face my spending habits.

Meanwhile, I was not happy with the amount of money I was saving each month. It seemed like it should be very straight forward: money in - money out = money saved. I had a fixed salary, so the first part of the formula was straight forward to plug in. But the second part was more of a black hole. Where was all my money going?

 
Black_Hole.png
 

Being the data-obsessed nerd and Excel-tinkerer that I was, I decided to build my own budget tracker “app”, where I manually input each transaction. My goal for 2020 was to track every single penny that went in and out of my hands (or digital accounts). It didn’t matter whether it was a thousand-dollar purchase, or even a quarter that I paid for street parking. Everything went in the budget tracker.

365 days and 1,030 entries later, I had a colorful and fully completed dashboard

 
Budget Tracker Dashboard.png
 

The biggest lessons learned:

1. 🔔 Awareness

If I could only share one takeaway, it would be this. The act of manually inputing each expense into my tracker made me so much more self aware of my spending amounts and spending frequency. It provided real-time feedback that no other tracking method could have given me, because inputting each purchase made me so much more conscious of each time I swiped my card. It was much more effective than using automated budget apps (i.e. Mint), because while they do track our spending, it’s much more passive and in-the-background type of tracking. If I noticed that I was inputting more expenses normal, I knew to proactively slow down. Other times, I’d find myself asking is it worth buying this and having to update my tracker for this… It really shook me out of the auto-consumption mode, and it allowed me to make informed, data-driven decisions quickly.

"If you can't measure it, you can't improve it." - Peter Drucker

2. 🔄 you QUICKLY REALIZE WHICH COSTS ARE RECURRING

You quickly identify the monthly, recurring costs. This includes both your necessities, like rent, bills and food. Knowing this number is crucial to understanding your savings, because the recurring costs create the absolute ceiling on how much you will save each month, regardless of how much you cut elsewhere. Evaluate how important each one is (i.e. subscriptions, memberships, etc.), so that you can trim the fat.

3. 🗓️ you CAN PREDICT WHERE you WILL BE

After I started tracking for the first few months, I realized that I could estimate pretty accurately how much money I would save each month. I would already know by the beginning of the month how much I’d add into my savings at month-end, as I could estimate the recurring expenses, and add any bucket of costs that would be unique to that specific month (i.e. birthdays, anniversaries, holidays).

Also, it became exponentially easier to just know if I was over or under-spending, without having to check my tracker. And I would be able to quickly adjust my spending to ensure I came in under or in-line with the budget for that month. This made it so much easier to stay consistent and motivated to stay on track.

4. 🥸 Tracking is USEFUL, not obsessive

I can probably only speak for myself here, since everybody is different, but I think this habit suits my personality really well, since I feel like I have full view of my financial health and control of my finances, every day and every month. Although it may sound like an intense amount of tracking, I quickly realized that it was much less work that I initially expected.

SO NOW WHAT?

I am so happy that I started tracking my expenses last year. I wish I had started years ago. The clarity and control over my finances feels so liberating, as I can project ahead with full understanding of what’s coming in and out of my bank accounts at any given time. I know what I can afford, and I can plan ahead for larger purchases.

I recommend anyone to try this out, even if just for a week or a month. It’s surprising how much it changes the way you spend money.

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7 Things You Should Know About No-Penalty CDs

With so much uncertainty in the economy right now, I’ve been focused on building my cash. But instead of just sitting there like a bench warmer, I’d like to have the money work for me a bit.

Despite offering higher interest rates, I’ve always shied away from regular CD’s because they required leaving my money in the bank for a fixed period of time (and penalized me if I withdrew my money earlier than the agreed term). I mean how can I predict today if I won’t need that Le Creuset signature dutch oven within the next 2 months??

And then I discovered the no-penalty CD.

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The Federal Reserve impacts the lives of US citizens every day. It’s considered the most important and powerful financial institution of the United States.

Particularly in response to recent times, the Federal Reserve has made the news for “cutting rates”, “buying billions worth of government bonds” and being tied to the rising trend of money printing memes.

These news impact your life (well maybe not the memes), so it’s always good to have a basic knowledge of what the Federal Reserve does and how it affects your wallet.

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We are constantly under financial attack by financial emergencies that are authentically and genuinely unexpected.

There’s minor emergencies, like a nail in the tire, and major emergencies, like a trip to the emergency room. All of these are attacks on your money.

Building your financial fortress is crucial to defending yourself from these attacks.

Putting Your Expenses on Lockdown

I hope all of you and your families are staying safe these days. No doubt these are some weird and unprecedented times.

Everyone’s quarantined at home, stores are closed, schools are shut down and events are cancelled. Freeways are empty and any on-going activities have essentially been put on hold. It’s like the world has hit the pause button on life in 2020. After all this is over, it’ll feel as if we finished 2019 and skipped right over to 2021.

So what can we do during this period?

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A stock is a type of investment. When you purchase stock in a company, that means you are buying a small portion of that company. In other words, you own shares of the company. And as a result, you are considered a shareholder of this company.

Companies will sell shares to raise money to operate their business. This money can be used for a variety of reasons, including funding growth and expansion or paying off debt.