Alright gang, here we go! The most critical component of growing wealthy at the early stages: learning how to TRACK YOUR SPENDING. 

Why track your spending:

How could we possibly save money or reach financial goals, if we do not know what we are burning $$ on??

Imagine wanting to get more healthy, but never bothering to think about what we have been eating or how much we exercise. What if we wanted a high mark in a class; would we go through day by day showing up to lecture but doing none of the required homework? Or decide to learn how to play guitar; would we just hope to one day reach our goal without changing our routine at all? No. We’ll just get stuck at the beginner level forever; get a mediocre grade; see minimal positive health results. We may get to our financial goal eventually, but so much more slowly and with avoidable meandering causing setbacks.

That is why we must learn how to track our spending; it is the cornerstone of money management and growth.

Honestly, the amount of change I have made in the past year-and-a-bit on my lifestyle and spending choices has been heavily due to monitoring what happens to my money. I remember my journey began one day late into my 12 month co-op: I looked at a new paycheuqe, saw the Year-to-date pay, and said ”holy crow, I don’t have nearly that much in my bank! Where’d it go?! I want that money!” Therefore, I now do my best to keep all the money I earn.

Once I realised how much money I was being paid versus how much I was actually holding in my control, I had the power to vastly increase my value through shearing away unessential expenses.

Hoarding my income is how I am quickly increasing my treasure trove through these early times of employment. This has forged a fiercely frugal mindset and lifestyle for me that, as I pursue generating higher/more incomes in future years, will compound into massive wealth.

An example of what you can do if you track your spending:

Think about it: if we make $45,000/year after tax, and spend $15,000/year, that’s $30,000 stockpiled into our treasure chest in just one year! When we have it earning about 7% interest in an index ETF, after only 3 years of saving $30,000/year we’ll be worth $100,000 more!

Look at that!^^ Doesn’t growing $100,000 richer every three years sound worth mustering a little willpower for??

Additionally, if we find there’s $20-25,000 of death-defying expenses weighting us down annually, we’ll have to force our income up an extra $5-10,000 within the year to keep our saving goal (as an example).

The point is, if we don’t know how much we are spending, it is vastly more difficult to accumulate savings. For instance, it does not matter how high our income is if we are blowing it all on purchases. We will not get any closer to financial freedom; instead remaining chained to our jobs.

Now that it’s apparent lowering spending can help get your bank swol and you’re fired up to pump savings, let’s get into what I mean by learning to track spending and how to effectively do it.

Methods to track your spending:

So, how are you going to keep track of what you spend day-to-day? Seems like a hassle… nah, it’s really not. I highly recommend using an app: for me, it’s more convenient to log a transaction in an app as it happens, or right after, than writing down each purchase and manually organising the numbers. My phone is usually nearby in general; whether I’m out or at home, so to grab it and input the payment I just completed is effortless.

Use an app:

Monefy is the app I’ve been using to track my spending for more than a year now. I have to input each expense — which is good because then I have that moment to pause and think whether the transaction is worth it — and many categories are available to organise the spending into. Firstly, I like the interface for analysing the data: it is basic, with a pleasant colour scheme. Secondly, I am very fond of how minimal it is. I have dabbled with a few other money management apps — in contrast, they were much too immersive and complex for the job. All we want is something to organise our spending and make it easy to visualise. Don’t get caught up in making this more complicated than it is.

• 

• 

• 

Use a custom method:

Of course, there are many other ways to accomplish tracking spending. Whether it is pencil and paper you prefer, Excel sheet, or basic Word doc, you can customise it to your liking as seen fit. For example, there is a little notebook available from Staples that fills the role for very cheap. Or I have a Money Tracker Sheet made in Word that has all the basics to start record keeping; it could be printed out, or kept as a file on your device and then multiplied for each month.

Track everything!

Needless to say, the point of this training is to exponentially strengthen your discipline when it comes to spending money. Once you have a medium to track your spending, you want to write down EVERY TIME you make a transaction. When it was, what it was and why, and how much it was, should all be comprehensible when you look back at what went down. If you look back to my Monefy screenshots, the rightmost one illustrates how I label each item.

Doing this will really make you cringe and wake up! By having all your spending habits staring you in the face, it highlights the unnecessary purchases you tossed money away on. Inputting transactions as they occur will help you pause and think before you buy. Furthermore, it reveals how many transactions are really happening in your day to day life. This creates the opportunity to scrutinise; whereby if the transaction is important, maybe there is a cheaper version or way to acquire the service. 

….

…Alright, it may be a bit overwhelming having all this thrown at you. If most of this strategy seems crazy to follow, that’s understandable. It would be tough to surge right into this. Let’s take the first step though: write down all your expenses to see what’s really going on. Then try cutting $50 next month and see how it feels. Maybe you’ll challenge yourself to cut another $50 or $25 the following month, maybe not. This is the most crucial step to growing personal wealth though, so please give it an effort.

This doesn’t need to last forever:

Thankfully, as time goes on, tracking each expense shrinks as a factor. Mainly because the principle becomes ingrained into our habits and mind. Thus, we live frugally by nature. Importantly, we learn how to minimise our largest expenses so that the greatest amount of margin is created. Nevertheless, having the tight security on our spending habits is a great way to get ahead early on in our adventure to Financial Freedom.

If you are ready to start the journey to wealth, get pumped. It feels so good to have money. I am stoked to have us here together.

Let’s get into more expenditure details in part 2 of learning to Corral Your Bucks…