How to Spend Money Without Worrying
Flickr image "What's in my bag" by Hilliary Stein
Financial freedom is about having enough to spend. There are too many stuff out there that we can spend our monies. If you follow economics, you will understand that there are unlimited wants but limited resources. Thus, it’s too easy in a place like Singapore with numerous shopping malls and retail outlets for you to live beyond your means.
So how do you allow yourself to spend without worrying about going beyond your means?
Track your expenses daily
After reading “Your Money or Your Life” by Vicki Robbins and Joe Dominguez, I started to track every single expense that I incurred on a daily basis.
I have been doing this for close to a year now and I realise the interesting impact of being aware where my money is flowing. For one, I know how much of my income is spent every month and consequently how much I save each month.
This has been very powerful in allowing me to know if I’m truly practicing what I preach here at fivecentstencents, i.e. to live within your means. So long as we manage to save every month, we’ll growing our investible net worth. That’s part of the battle won, the other part is to grow that investible net-worth safely by beating inflation and fixed deposit rates (my investment benchmarks).
Spending because you’re saving
The paradox of being so meticulous in tracking my expenditure is that I now know for sure if that cup of cappucino or piece of cheesecake at Coffee Bean or McDonalds’ Cafe is something I can afford to spend.
Previously, I erred on the side of caution and deprived myself of some of the small luxuries in life. This was because I was worried that too many small luxuries will reduce my savings and tip my lifestyle expenditure beyond my means.
Because I now track my spending, I know very clearly if I’m saving or not for the month. This literally influences my behaviour as I’ll tend to curtail discretionary spending if I’m spending more than necessary for the month and the targetted savings level is being compromised.
Thus, by tracking my expenses carefully, it has allowed me to worry less during the weekend and enjoy my cup of cappucino with the spouse and daughter because I know I’ll still meet my savings target after that expenditure.
How do you spend money without worrying?
Share with Panzer in the comments section.
Hi Bro,
That is the right attitude. You only live once. Don’t over save and under spend.
createwealth8888´s last blog ..Is Home For You to Retire Or to fund your Retirement?
Hey Panzer,
A way to spending without worrying too much is to automate your finances by linking your accounts together in a organized structure.
Taking note of every expense is tough and time-consuming.
With automation of your finances, you can spend money without worrying if you have paid your bills, saved for the month.
Cheers and all the best.
Andre´s last blog ..Personal finance in a nutshell for people in their 20s Ep 2
Hi Andre
The technique you mention sounds like Ramit Sethi’s “I Will Teach You to be Rich”.
Actually, taking note of expenses is doesn’t take me more than 2-3 minutes a day because it’s become a habit with me. I have a worksheet that will compute total variable (discretionary e.g. coffee/small luxuries) and fixed expenses (service and convervancy, utilities, diapers) and also how much of my disposable income I save each month.
This is an approach taken from “Your Money or Your Life”. It can be time consuming to set up the system in the beginning but now it’s pretty autopilot, i.e. I feel that something is missing when I don’t record my expenses down
For me, the recording of expenses make me aware of where my money is going and tends to make me very conscious of my spending patterns. Thus, I can make adjustments more frequently from seeing the data. For an accounting/audit trained chap, it works! haha!
Different strokes for different folks. I have 4 bank accounts but make use of mainly Maybank iSavvy to maximise interest (at 0.75%) and one for salary credit and one for making payments. I track my total net-worth in my personal net-worth worksheet so I know where my net-worth is allocated over cash, equities, etc.
Be well and prosper.
Panzer´s last blog ..Maybank iSavvy Time Deposit Rates
Createwealth8888
Agree. I’ve seen reservist die at 32 piahing for IPPT. No point amassing all the wealth to enjoy little of it while we are still alive
Panzer´s last blog ..Maybank iSavvy Time Deposit Rates
Hey Panzer,
I got the idea from Automatic Finances. This blogger also talks about having a system to handle your finances without worrying too much. I read about Ramit’s system too. Very similar indeed. I am considering to adopt a similar system as well.
As for managing my finances now, I am using Money Manager EX. It is pretty easy to use and the software display charts showing where your money goes to. Pretty sick of my boring excel spreadsheet though.
Cheers.
Hi Andre
I’m more inclined towards Excel because I’m an accountant by training and at the same time the current Excel 2007 has quite good looking charts and graphs that’s very useful.
The useful thing about excel is that you can track long history and have lots of data over time.
Different tools work well depending on what you’re looking for.
Be well and prosper.
Panzer´s last blog ..Maybank iSavvy Time Deposit Rates
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