Recording Your Expenses

Your chances of long-term success will always be higher with a clear target to aim at. Whether it’s losing weight or chasing a girl, it’s always good to know the amount you’re trying to lose or how much she’s going to put a dent in your wallet (oops). On the other hand, if you can’t ascertain your expenditure, even after saving for 20 years, you would still be unsure if you had accumulated enough. As a result, you could easily delay your ideal 15 Hour Work Week.

How I Record My Expenses

I wouldn’t want that to happen to me and I also hate to be unsure (especially regarding ovulation periods). Therefore, I have actually periodically recorded every single dollar of my expenses within the month to obtain an accurate picture of my spending patterns. A long long time ago (actually less than 5 years), this would mean booting up my laptop every evening and trying to recall the times in the day when I had to grudgingly give up some of my hard-earned moolah in exchange for some goods or services.

Luckily, recording and monitoring expenses is so convenient these days since smartphones are already a given. Like most people, I own one of them and carry it with me almost everywhere. My iPhone 4 is already packed with features but after supplementing it with a budgeting app, it’s now even powerful enough to make my wife’s mood sour. (I love showing her our monthly expenses.) The app is where I record my expenses and I have made it a habit to do it right after my wallet has been lightened.

Although it’s more convenient now, it’s still not a bed of roses. Otherwise, you would also have done it by now, right? Tabulating finances became slightly trickier ever since I evolved from a swinging bachelor to a faithful husband. Previously when we were dating, I managed to convince my other half to document her expenses and she actually remarked that this action had the unintended effect of restraining her expenditure. “Hurray!”, I thought. Unfortunately this also made her miserable and I would often bear the brunt of this unhappiness. Therefore, after moving in together, I have decided to outsource this role to myself. I mean, I was the PF nerd that was more concerned with the finances so it was only fair for to me to pick up the slack and lead.

A Simple Guide For You

Ok, enough of my rambling and it’s time for me to provide some meat and illustrate some easy and practical steps to help kickstart your expenses recording journey.

Step 1 – Download an App

I actually paid for this HomeBudget app even though I only use the basic features. I actually tried out a couple of those free ones but they were either lagging (loaded with advertisements) or had some limitations (number of categories/entries you could make). But it’s entirely up to you and a free app could be a good trial for your first month too.

Step 2 – Organise your Categories

Organising your expenses into the different categories/sub-categories can be a source of frustration. It’s really more of an art than science. Should you park the underwear you bought at the supermarket under Clothing or Groceries. You might be surprised to know that I prefer the latter (I am not so kinky to buy underwear made of candies or chocolates). I personally have little interest in going through all the items in the supermarket receipts since 90% of the stuff I purchase at supermarkets are indeed groceries.

After a few months, you could also subsequently retweak the default grouping to suit your expenditure pattern or specific expenditure goals. It really gets easier once you get the hang of it, so hang in there! For example, I find it more useful to subcategorise Eating Out into the different “Hawker”, “Fast Food”, “Restaurant” rather than by meals like “Breakfast” and “Lunch”.

Step 3 – Find out those Yearly Expenses and Ammortise them

People often underestimate their expenses due to this. You might diligently record for the months June and July and declare that you spend an average of $2,500 a month. But that’s cheating or even lying to yourself if the tax bills, insurance premiums and yearly magazine subscription are all due in August! For me, it makes more sense to ammortise all these expenses over the course of the year instead. So find out all these expenses in your life, total them up, divide it by 12, and set it up as a recurring monthly expense!

Step 4 – Set up Recurring Expenses

Besides these yearly expenses, there is the monthly broadband subscription, mortgage and conservancy fees that are pretty much fixed. Save your time by setting them up as recurring expenses to minimize the hassle. Do not be surprised to find out that after Step 3 and 4, your household’s fixed costs could run up to almost $2,000 a month. (Note that mobile bills and utility bills might not be considered fixed)

Step 5 – Keep the discipline and record everyday 

Mental cues work great here, especially if you find it hard/embarassing to whip out your phone to record your expenses after lunch in front of your colleagues. Perhaps you can form a habit to record it just before you brush your teeth at night or after you take out the rubbish? It’s really much harder to recall your expenses for the day after a week has passed (I can’t even remember what my wife wore to work 3 days ago and this does give me some problems occasionally).

Yes, I know. You want to start recording on the 1st day of the month but we are already almost a week into August. So let’s wait for September right? Well, my suggestion is that you should REALLY START NOW, practise your financial discipline and use August as a trial instead to finetune and get ready for the next month.

Find out your monthly expenses today to identify the fat in your budget. Thereafter, it would be easier to cut them out and chart an easier path towards your very own 15 HWW!