Tracking expenses at its core is the most important step to growing wealthy. Amazingly, most people try to ignore this crucial step.

When I saw on that paycheque how much my company had paid me that year for my time and effort versus how much I had actually kept to improve my net worth, it made me feel a bit like a schmuck.

I had been looking at credit card statements most months going “aw man, that’s more than I wanted to spend”. And when I would look at the individual transactions, a lot of them would make me think “jeez I really didn’t need to buy that,” or ” damn, I didn’t notice I had gone out so many times”. However, only once I had that paycheque data to compare to at the end of the year, it really hit home how spending habits are what actually have the largest impact on our financial status long term.

Was I doing something wrong?

Since I was looking back at my credit card statements to see what I spent on in a month, it would seem sensible that I was good at managing my spending and only making conscious “good buys”. This was not the case; however, because if I am looking back on my month’s spending, it is already too late!

That is what my problem was. I had no immediate media to reference while deciding to buy something or go out somewhere; it’s awfully difficult to tame the impulsive beast within us. Plus, time goes by more slowly then it seems. I had many “oh, I haven’t gone out for a beer with friends in a while; I’ll get them together tonight” times. Then I would check my bank account at the end of the month and go “shoot, it had only been a week since each time we saw each other!?” This is a very easy way to rack up costs.

Thankfully, by having a trusty and updated reference, we can easily pull it up before making the call-to-arms and notice that we spent $20 each of the last two weeks already with comrades; therefore, we’ll put off another gathering until later.

Once I had this epiphany is when I resolved to manually track my spending in real-time. I remember doing some scouting on different apps. The ones that needed to link to my actual bank accounts made me uneasy. Plus, that doesn’t really help because the whole point is us doing the record-keeping to instil accountability. I picked Monefy because it seemed like the easiest to set up and use. And I liked the colours of it. Vert happy with the choice.

Now I was off to the races!

Man, it hurt!

If only I had started tracking my expenses earlier…

I had spent pretty much that previous whole summer going bananas on craft beers. About once a week, I walked into a liquor store looking for a few beers. However, I would come out with at least 8-10. Maybe 3-4 would be ones I knew I loved, and then the others would be new ones to try that I thought had awesome designs or sounded tasty. I was monkeyed around hard by marketing teams.

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Here’s something I couldn’t wrap my head around until I was continually tracking each purchase: buying craft beers is maddeningly expensive, especially if you don’t stop! If I was buying 10 beers a week, and each one is likely $3.20-$4.00 (so let’s do $3.60 average) that’s $36 per week!! And “summer” was probably ~10 weeks (hopefully) so that’s $360 I blew on just beer in only two and a half months…

This is the wrong way to reach Financial Freedom friends.

Let the record-keeping begin!

I began tracking my expenses at the very start of 2019. This way I could have a full year to analyse at the year-end for predicting my 2020 trends. The summer beer craze happened in 2018, so unfortunately I didn’t get to terminate that. I have a feeling if I had put even two weeks straight of buying $36 worth of beer into my records it would’ve ended my addiction early.

Here are the things I found shockingly easy to spend money on without thinking there is any long-term damage:

• Going out for food: even if it is fast food, we are likely handing off $10 per meal. If it is a restaurant, this gets jacked right up with a drink and tips to probably $30.
• Grabbing a drink with friends: alcohol at a bar has ridiculous markup. Paying for a pint and tip is upwards of $10, and this is if you can stop at one beer. Don’t get me started on if it’s a weekend and choose a place with a cover fee!
• Clothes: just try going shopping for clothes at a name brand and spending less than $70. Shoes rip us off even more.
• Driving: The more we drive, the more we spend on gas, the more we spend on oil changes, the more we spend on maintenance.
• Gifts: good gracious! It is nuts how often we need to buying something in order to have a relation feel like they matter to us. Why oh why do we keep this roller coaster of consumer-good-giving going?

By tracking my expenses I automatically began spending less:

What I instantly noticed when I committed to record-keeping was a boost in mettle when it came to fending off invitations to blow money. Along with that came a vigour for finding deals when I did need to purchase a product. My money finally became a part of me instead of just a concept of something I either had enough of for buying a thing, or not enough of for buying a thing. In the same way we think of scheduling our time each day, I was now scheduling my money.

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Tracking expenses is the key to money management:

Being accountable for my spending gave me a new view on my finances. I could now look into the future and have a good idea of what my expenses would be week-to-week and month-to-month (not quite yet year-to-year because I’m in a fluctuating point of life where many things could change every year). The freedom to plan ahead with good estimates was now available to me.

Instead of just planning a trip with “I have enough money so I’ll be fine to do this,” I knew could plan a trip and go “ok, looks like this is how much each piece of the trip will cost. If I take the trip in this month I’ll have x money saved by then and my other expenses around this time should be y. If I add the trip, z will be what I’m expecting to have once all is said and done. Am I comfortable with this?”

Opportunities abound when we are in control of our financial future! I was able to go on some fantastic adventures last year. These included camping multiple times in Killarney Provincial Park, having a Tiny House anniversary weekend with Nicole, running Bruce Trail Challenge and End-to-End events, and a week in Jamaica for an all-inclusive destination wedding(!). Additionally, I had the financial flexibility to afford time off for a school trip to Vancouver, and join my family on trips to Florida over Christmas and two weeks in Costa Rica!

Tracking your expenses is the backbone of money management. Seriously, get spending under control. It’ll change your life!

In later posts, I’ll go into specifics about how I axed each individual category of expense down to splinters. Stay tuned.