When I was learning to be more financially responsible, one of the very first thing I did was tracking my spending (Read: 10 Baby Steps To Financial Literacy).
When I decided to join the FIRE Movement, I realise it is part two of STEP 2 to achieve financial freedom using the FIRE Method
- My Step-by-Step Plan To Financial Freedom
- How To Track Your Life Energy (What is your real hourly wage?)
Recording your earning and spending is simple, but not necessarily easy. Keying in all your purchases sounds like a chore you’ll hate to do. But once you get the hang out it, it becomes natural. When you have a records of your spending, you wonder how you lived so long without knowing where your money goes.
Why You Must Track Your Money
In my opinion, this is the most important steps in the 9 Steps Plan for Financial Freedom. DO NOT SKIP THIS STEP. Even if you are reluctant to count your Life Energy, draw a Life Energy vs Earnings chart, learn about investments, this is something that you must do.
- If you have no idea where your money goes, you can’t control unnecessary spending and save (more)
- If you don’t save, you can’t invest
- If you don’t invest, you can’t be financially free.
As simple as that.
How I Track My Money….quickly & easily
I track my money using Money Lover App. When I did it two years ago, I was not very interested in money. To record money that goes in and out was a chore.
I knew that I wouldn’t do it if I had to carry a notepad or create an excel sheet. It had to be easy. Very easy. I like Money Lover App’s interface and beautiful icons. So I got it for RM 20 (then). It’s one of my best purchases.
What I did (and still doing)
- Put it in the first page of my phone
- Every time I buy something with cash, I would key in (<1 min)
- When I go out with family/friends, I’ll keep the receipt and key in my expenses when I’m home ( <1 min)
- When receive my credit card bill, I’ll key it in the app as well (5 minutes)
It doesn’t take a lot of time or effort. But at the end of the month, I have a record of my earnings, savings, and pie chart on how I spend my money.
I thought I will have no time for that. So I told myself “If you have time to take Instagram photos, you have time to key in your purchases!”. And I loved the results.
With a click of a button I can see:
- How much I spent or save (last year, last month, this year, last year, or last 3 months)
- My total expense and income
- How much/percentage I spend in each category
Having to count every cent I know will deter me from doing it/ feel stress about it. If you can, count every cent. If you can’t, I think it’s okay too.
Do we need to count every cent?
I am not a purist. I don’t count it accurately to the dot. If something is $29.90, I’ll key in $30. In this book, they recommend that you count every cent. But I personally follow the FIRE Movement loosely. Knowing my spending pattern and near accurate spending is quite enough (at the moment).
How You Can Track Your Money
There is no best way of doing this; whatever works best for you is the best method. I have a few ideas for you :
- App (e.g Money Lover App, RM 20) [Apple iTunes]
- Google Docs – Create an Excel Sheet (FREE)
- Notebook (RM 16 for 12) Get a small and inexpensive notebook like 555. Keep it in your bag/wallet, along with a pen [555 Notebook]
Tracking Your Spending Easily & Beautifully With Money Lover App
For me, I use an app. I needed this to be easy (no need to carry a notebook or pen) for it to be doing it for a long time.
I like that I can easily key in my earning/spending in different categories. But the end of the month, it is translated to charts and pies so I have an overview of my spending/earnings.
I’m sure they are other similar apps out there, but I’m very happy with this one and I have been using it for 2 years now.
OVER TO YOU: Do you record your spending?
I challenge you to record your spending. Every time you get paid or buy something, record it instantly. Get an app or key it in a notebook. Whichever way you choose, just make sure that you do it consistently.
Why don’t you track your spending? What is stopping you?
If you do, how do you track your spending? What effect does it have on you?
Also, I spoke to Money Lover to extend a discount code to my readers. If you haven’t already, do get an app to start recording your spending. I hope this discount code will help you kickstart his important habit:
70% DISCOUNT CODE FOR MONEY LOVER APP
- STEP 1: Download Money Lover app
- STEP 2: Open this link with your mobile phone: https://anj66.app.goo.gl/enter-code
- STEP 3: Enter code “jewelpie”
Note: Code expired on December 8th 2019
If you have trouble getting the discount: Close the app, open it again, and open this link: https://anj66.app.goo.gl/enter-code. Enter the code “jewelpie” (small caps, no space). Or update the app to latest version.