I’m sure every teen has received this advice from mom or dad when they get their first real job: “Watch your spending habits” and “Don’t spend it all at once or it will be gone before you know it”. Well the truth is, they were right. If you’re not watching where you’re spending your hard earned dollars (especially once you hit adulthood and have actual bills to pay), it’ll be gone in the blink of an eye! Spending money is so easy to do - it’s spending money when and where you should that is the challenge. This week’s post focuses on how I manage my money and some tips you can adapt if you want to watch your spending habits.
Having grown up in a single parent home following the early 90’s recession, to say we’ve been through hard financial times puts it lightly. And although it was rough at times, I actually appreciate what those hard times have taught me. I know how to spend wisely and save my money, how to judge what is and isn’t valuable, a good investment or necessary, how to maximize on the resources on hand, and how to be a smart shopper. Today, I’m very frugal with my money and try to be a minimalist where possible, prioritizing necessities. I dislike having duplicates and triplicates of the same or similar items and I try to invest in good quality items where I only need to purchase one (and only once if I can); I only purchase groceries that we will use up (our household aims for no waste) and I even cycle through my pretty well all of my belongings at least annually (clothes, furniture, books, kitchenware, etc.) to clear out what’s not being utilized. I’m a no waste, no non-sense type of girl.
Aiming for minimal spending while maximizing your necessities and desires is the sweet spot. As a person still working to establish myself in my young career, I have to be conscious of my spending habits. And as such, I act rationally when it comes to making spending decisions, rarely splurging on items or experiences that simply don’t make sense for the money, and utilizing a smart alternative where I can (making my coffee at home and bringing it in instead of buying one every day is a simple example).
And I set budgets and track all of my expenses (even the little ones and cash spending) because I like knowing where my money goes and what portion of my incomes is going to groceries, gas for my car, meals out, and my internet and phone bills. With online banking, all of the information is at your fingertips so it’s quite easy to track and compare. And using that information in an effective way helps me plan for future expenses, compare previous bills (and understand variances), and also catch odd spending habits with the ability to track them back to the source (and even catch incorrect bills or billing issues too). I track my expenses weekly and compare seasonally and year-to-year using Excel (thank you Microsoft for this handy application!), but you could use the free Google Sheets version too. I also have a set minimum and maximum monthly budget that is included with my expense tracking, and I have that set to turn my running total red if the amount exceeds my maximum spend. These budgets were originally based on estimates (you know roughly how much it costs to fill up a tank of gas) then adjusted based on amounts from my first year of tracking data.
Using tools like Excel are very useful not just with every day expense tracking, but with planning for trips and understanding exactly where you expect the money to go and where it was spent following that trip (and your overall total damage). This method also allows you to see where the big hits were (flights are usually a big chunk of that) and to plan better for your next trip based on the data (booking your flight earlier, buying gently used gear rather than new, etc.).
I stress that this system works quite well as long as you keep a few things in mind:
So I’ve shared my secret for spending wisely and given you a few tools and tips to adapt a system like this to your life. Now the rest is up to you!
P.S. If you have a few tips of your own to share or have another method that works, please share below!!
A millennial woman with 'old school' values, working my way through life in Canada and traveling when I can afford to. Seeking out my passions one day at a time.