Hacking Your Life: Finances and Budgeting

Introduction

Before I finished college I knew that I after graduation I was going to need to track my spending habits better. If I wanted to ever reach my financial goals at a decent age I was going to have to start saving and budgeting. The sooner the better.

In America tracking expenses can be very straight forward, as everything is paid for with your debit card you can use a site like Mint to automatically track what you spend. In a cash-based society like Japan this doesn’t work out so well. A lot of stores are cash only and I don’t even think there is a standard for online banking in Japan.

Problem

I needed a piece of software that could make this as hassle free as possible, support multiple currencies, and run on my Mac. I tried out a few different applications but none of them quite worked out for me. The eventual solution I settled on, and the one I was trying to avoid for some reason, was a simple Excel spreadsheet.

The next trick after getting my excel spreadsheet setup was to create some kind of workflow so I would actually input my data. The setup of the actual spreadsheet is quite simple. I have a sheet for every month with a column for the Name, Category, Memo, Date, Amount, and Running Total. Off to the side I have some other stats so I can track water, gas, electricity usage.

I get a receipt for every purchase I make and put it in my wallet.

The workflow I settled on was to input transactions into an excel workbook every few days. I don’t have a magic memory (far from it) and I’m far too absentminded to remember to do this by myself.

I thought of a simple hack get myself to remember and then input the amounts for every purchase. I get a receipt for every purchase I make put it into my wallet. It stays there until I put it into the excel file. If I wait too long my wallet starts getting thick and money becomes a pain to put in/take out. For the programmers out there it’s like It’s like memory allocation but in my wallet. If I don’t clean up after myself and release every so often performance decreases and I might crash.

Results

The first month I did not review my purchases mid-month at all. I just lived normally and input into the system. After the first month of using it I was amazed. Then very quickly I was mortified. I spent how much on dining out?! I bought how many cups of coffee at Starbucks? I could see exactly how much and where I spent almost every last yen. Even with that elevated level spent on dining out I could still save 20% of my check. But it didn’t settle with me.

I quickly understood that I needed to reel in expenditure on dining out. I embraced the flexibility with my Excel based system and added another section to the August sheet – a weekly comparison of the money spent dining out vs the money spent on food.

With this weekly reminder I could better keep my costs under control. That was at the end of July and the beginning of August. It’s now the end of August and how did I do? In July my dining out costs were about double of my expenditure on groceries. In August my dining out costs were about half the cost of my expenditure on groceries. To top things off, I was wasting less food and my expenditure on groceries only went up by about ¥1,000 ( 10 dollars ). I still want to cut it more, but that’ a goal for next month.

Conclusion

Track where and how you spend your money. It’s amazing how much easier it is to make changes to your spending once you understand how much you spend. You have a concrete number instead of thinking “I need to dine out less”.

My method of keeping track of my finances works great for me. Do whatever you need to help yourself keep track of this stuff. Hack your life. Help yourself Get Rich. Slowly.