Should I know where my money is gone?
It was in college (2017) that I started to maintain money by myself. My parents sent it monthly and said it was just for paying two things: rent room and daily needs. Had no prior knowledge, I naturally spent it based on what needs or wants come to me first.
Fast forward, there was a time when my money ran out when it was still a week for the next month. I told my parents to send it in advance, but they didn’t have any and then asked me to be patient and wait. As I felt a bit frustrated, I tried to figure out what can I do to survive.
It was a 1.5-liter mineral water bottle filled with coins that save my life. I used to collect it every time I got changes. Saw that as treasure, I enthusiastically brought that clinked-sound bottle along the way and asked one of the canteen sellers to exchange it with their paper money.
I survived.
Since that, I was aware of one characteristic of money that is limited.
In consequence, I have to manage my money wiser so that it would be sufficient from the beginning until the last of the month.
Sit alone and write it down
“How?”
That’s the sole question that popped up in my head.
At the corner of my 3 x 3 square meter dimmed room, I started to create a mind map about “where did my money go in a month?” and below is the result,
- food
- groceries
- rent room
- internet, and
- hangout
Then I broke down how often I used my money for that stuff. I used two simple methods to create a limit for those categories: calculate based on its spending repetition or just create a rough estimation.
Let’s say for food: in a day I eat 3x, so I multiply my one meal price by 3x followed by 30 days so that I got a spending plan for food.
As a result, I would have a complete budget for my money.
I still remember, I wrote my spending plan list on a piece of paper and hung it on the wall
To keep it on track, I had a small note to write my expenses. No specific format, just a list like:
23/02/2017
- Breakfast: IDR 15.000
- Lunch: IDR 15.000
- Dinner: IDR 20.000
- Ice Cream: IDR 5.000
After a month, I realized it was really obsolete. Then I moved to the mobile app.
Pushed by a great spirit of change, I passionately updated my expenses. This was real, once I took money out of my pocket, I immediately opened that app and wrote it down. Even I shared this app with some of my friends and encouraged them to track theirs like mine.
Several months later, when I felt it was under control, I stopped it slowly. It was also because of the laziness that emerged from my body.
Imagine that you have a busy day, you have to update every single money activity you did. Or you decided to write it later, but it suddenly disappeared from your memory, and it ended up with manipulation to keep it balanced. Duh.
It was draining and this really needs commitment, and I was still bad at it at that time, even until now for some aspects.
From one minute after a transaction, to delay it for two days, to a week, to a month, and until never again.
Don’t get me wrong, I was still working on the spending plan I’d built but without daily tracking. I’ve got a sense of control over it which is better than I did yesterday.
Take full responsibility of my own money
My parents stopped giving me money as I commenced to enter the world that converts time, energy, and effort into a paycheck, which is being an employee. To be honest, I was afraid of being financially apart from my family. It’s because my first income is really at minimum wage, which I think might not be sufficient to survive in Jakarta.
I need to be fully aware of my money and manage it as efficiently as I can
As an action, I re-created a new spending plan and added some categories:
- transportation (you can visit this if you want to see my struggles of it)
- shopping
- family
- saving
- giving
- unexpected
I also gained new knowledge for budgeting and other money management things from many sources like books, articles, and podcasts. It all has changed my perspective about money.
I feel my life is just like a company, and I am the CFO of that
So, I have to painstakingly manage the money to make my company’s daily operations run really well.
In this chapter, I became more serious about reconciling my expenses. Here are the initiatives:
- I regularly update the amount of my money from several channels, like bank account, e-wallet, and cash into my tracker apps. So, whenever I do a transaction, I need to select where the source I’ll use
- For every transaction, I try to put some detailed information, like brand, price per pcs, quantity, people involved, etc. I think someday I’ll need this information
- I keep counting any small transactions, like payment or transfer fee, parking, alms, snacks, etc. These uncounted may have potential to ruin my expenses
- The last, I’m always questioning when there’s an imbalance on the record and immediately running an investigation to find where’s the difference
But I found the problem that was still the same, I often forget some transactions. I’ve ever sat for one hour and a half just to think about what things I’ve bought in the past three days. Argh.
It was clear that I should push myself harder, but I prefer to work with strategy. So here they are,
- Keep all payment receipt on the wallet or phone gallery
- Create a simple note on my phone. I usually send it on WhatsApp to mom or myself
- Take a quiet place and try to find something associated with those expenses in my head
- Set a regular schedule. Let’s say once in two days when I defecate in the morning
Embrace the era of data
Nowadays, I often hear about what is called data-driven decision. It’s basically when you use data to gain insight and create a meaningful decision.
But to do that, I need a complete data
It’s going to happen as long as I update the expenses continuously. After it’s been completely updated for a month, I can gain more representative insights and review it. Here is a glimpse of my last month’s expenses:
- Money distribution — I did a month transaction using Cash 50%, A Bank 46%, and B Bank 4%
- Category contribution — My top 5 categories are Family (31%), Unexpected (23%), Food (14%), Transportation (9%), Groceries (7%)
- Monthly comparation —There is a spending increase of 17.24% from the Feb to Mar
- Budgeting performance — Three categories are exceeded of budget: Unexpected (215%), Fashion (105%), and Giving (120%)
Once I know the insights, I’m confidently able to
- Adjust the amount of budget if the previous one it’s not adequate
- Plan something to buy and calculate the safety budget of it
- Know where’s category that can be allocated for the other important or urgent one. I have a fresh example for this,
It just happened last month, my motorcycle had an issue with some internal parts, and it cost IDR 650.000. Since it was a new case for me and I still had no budget for that, and I keep track of my money, I know where ‘post’ is possible to be allocated and hopefully, it won’t disturb the other.
The benefit
At least there are 2 benefits I feel so far,
Aware of my spending patterns
It’s not impossible for me to spend money mindlessly today than yesterday. Having a full report of my expenditures throughout the months will help me to recognize the trend, both positive and negative.
When I know the trend, it’ll be easier to make a change. “Is it from hangout?”, “Is it from online shopping?” I’ll know the answer.
Self-control
I’ve set a spending plan that I need to stick with. I always check the balance. When the budget from a category is running out and there’s a thing I want to buy, I talked to myself to be patient and buy it in the next month when the budget is filled again. That is the rule.
When the impulsive desire may come, I always ask “Is it important?”, “Do I still have any budget for this?”, “Can I buy it twice?”. After I pay attention to everywhere my money streams, I’ll notice whether the stream aligns with my priorities or not.
Closing statement
Through this story, I encourage you to start tracking your expenses. No matter whether you live with low or high lifestyle cost, it’ll be beneficial for your relationship with money.
Start it by recognizing your spending category — setting the budget — and monitoring it periodically
Use the tools that will fit with your preferences either using mobile apps or spreadsheets. It’s all okay as long as you keep tracking your cash flow and are able to gain insight from that.
Track your money doesn’t mean avoiding you to not being consumptive. Don’t you worry, you still can spend your money on everything you want, as long as you consciously know the limit and it doesn’t interfere with the rest of your money.
I’ll close this blog with a quote from Dave Ramsey, someone I don’t know because I just googled “money quotes” and find it as the best quote for calling it a day,
You must gain control over your money or the lack of it will forever control you
Good luck. Cheers!
