Every financial blog post, podcast, Youtube and article that I have read over the last two years have contained this one piece of advice: ‘track your expenses’. This was usually followed by: ‘create a budget’.
I have during different periods of my life definite phases:
- the ‘I have no money so what’s the point’ phase
- the ‘Not having a budget works for now, why bother’ phase
- the ‘I need to track my spending obsessively with loads of charts phase’
- the ‘I missed a week, I give up!’ phase
You may recognise yourself in one or more of those. I know that I have cycled through these quite often at different times. However, there was a golden period of 4 months were I did have it down to a tee. That’s what I aspire to go back to.
So what should I have done differently at the time?
Find a really motivating long term vision.
In that golden era, I recorded all my spending and savings and knew exactly where every single £1 went. I saved enough for my yearly car insurance with a sinking fund; I even saved for Christmas presents. However, there was one problem that affected the sustainability of my system: I didn’t have a long-term goal.
At the time I hadn’t even heard of the FIRE movement. I didn’t have any concrete financial aspirations. I had never even considered investing in the market or real estate as an option. So when I saved money, though it did feel good, I didn’t have a clear purpose for it other than spending it later.
Since getting more interested in personal finance, I have discovered the caveat of not saving/investing for retirement. I have learned how inflation very slowly gnaws through savings. As a result, I have found out I cannot afford not to invest in my future.
Know your milestones
As you saw in my last post, there are some resources out there that can give some realistic and broken down milestones for financial goals; whether it is saving 3 months of expenses for an emergency fund, investing enough to cover basic living expenses, or just striving to be debt-free.
Creating a long term plan with realistic and achievable goals is the one vital thing I didn’t do during that 4-month golden phase. As a result, the £10 I saved on my phone bill, the £5 I didn’t spend on drugstore make-up and the £3 I saved by packing my lunch that day just got absorbed by my everyday spending.
What I do in those moments now is take out a calculator to work out how much closer to my goal I would be if I didn’t spend that amount. Even if it’s 0.00012%, I know that it is making a difference. Charting progress on a graph can also help to see this change visually.
Learn the art of delayed gratification
This is by far the most difficult one for me at the moment. I want to see progress and I want to see it now!!!
I know how frustrating it is to see number creep up super slowly. Times where I have set backs and times where I overspend. And times where I think to myself ‘is it really worth it?’
I want to throw in the towel, give up the hard work of going through my accounts everyday, writing everything down, planning every expense and be disciplined in my spending. I just want to live in the moment, ‘Carpe Diem’ and buy that thing I really want.
However, I need to remind myself that though the process takes time, it will be completely worth it one day. I know this because of the inspiring testimonials of people who have done this before me.
To conclude: This is something I am starting to work on from now. I hope to be able to share this journey to inspire and motivate people on their own journey.