To reach my goal of becoming financially independent, February (and the rest of the year, obvs) was dedicated to spending wisely. In order to start doing so, the most urgent smart goal on my list was to find a way to make tracking expenses easy and fun. So easy and fun, in fact, that I can do it every day and stay on top of my wise spending. Because tracking where my money goes also gives me the opportunity to put a cap on it. Therefore, I needed a system with which I can budget the money that comes in, track where it goes out, and control the latter according to the first.
The ideal way for tracking expenses just arrived at my doorstep without me having to look for it first. I think Gretchen Rubin (in The Happiness Project) shares some wise Law-of-Attraction-kinda words like “when the student is ready, the teacher arrives”, which was totally true in this case. When I told a friend about February being Spend-Wisely-month, he showed me an app he’s been using for years to track his expenses. It’s called HomeBudget and it took me only two seconds to be sold on it.
HomeBudget is only available for iOS devices, which kinda sucks. You’ll also have to pay $4.99 for it, which is totally worth it, but which you’ll have to pay again if you want the app on multiple devices. I’m considering purchasing it again for my iMac though, so that says something. Anyway, it allows you to fill in your income, create categories of expenses, set a budget for all these categories, and track your expenses. And then it creates all these cool statistics and diagrams and whatever it is that you need to keep your spending in check. On top of that, all the data can be exported as well (I’ve not tried that yet, but I will).
This app makes it so easy to track expenses, I have no problem with using it daily. To give you a rough idea of how I’m using it; I created the following categories and subcategories:
At the beginning of the month, I fill in my income and set a budget for all the categories relevant for that month. My total budget should be at least €100 less than my income, which means I (try and) save at least €100 a month. As soon as my income starts to increase, I’ll be able to save more. HomeBudget tells you exactly how you’re doing with sticking to your budget. For example, it tells you how much money you’ve got left to spend, and how much you are (and should be) spending on average per day. Updating this app daily makes me feel totally in control of my finances. Even though not spending too much obviously still is my own responsibility.
Next to my expenses, I also looked into my income and savings goals in order to set budgets. I wrote down how much I want to save this year (and per month), what my fixed and variable (on average) expenses are, and how much I want to be able to spent on the rest of the categories. Based on that, I calculated how much money I need to make each month. Surprisingly, that number wasn’t as high as I expected. I may be far removed from it now (very far, actually), but it’s not something I cannot accomplish by the end of 2019.
I cannot yet save the amount of money I want to save each month. However, while knowing what goal I’m working towards, I decided to start with €100 a month. This includes the savings from my €1-a-day-daily-habit (€28 in February and €31 this month), for which I set up an automatic transfer. I created a spreadsheet in Excel (very loosely) based on this blogpost by Frugal and Thriving. It lists both my savings accounts and the different categories I’m saving for. I put in there the amounts I’ve already saved, how much I want to have saved at the end of the year, and how much I still need to save in order to reach that goal. (Can somebody please count the number of times I said “save” in this blogpost?) I update this spreadsheet at the end of every month, when I know exactly how much I spent and have left to save. After that I distribute the latter over (a few of) my savings categories.
Finances is actually the perfect topic to improve with a combination of stretch goals (ideal income and saving goals for the end of the year), smart goals (monthly income goals) and daily habits (expense tracking). I wrote a blogpost about combining these types of goals and how that increases your chances of success. If you’re working on improving your financial habits, I hope this helped or gave you some inspiration and motivation to do it your way!
Photo: Cocktails at KopaZ, Meloneras, Gran Canaria