Hello!

So, if you followed the steps, I outlined last week, you have:

Set the time aside for your money confidential meeting
Spent all your money from one account
A general idea of why you want to get a hang of your personal finances

Track your expenses

The next step is to track your expenses. If this sounds daunting, please don’t be alarmed. It’s probably one of the easiest bits of personal finance, and it creates the largest framework for you to build on.

Let me tell you why…

Well for one, what you do not measure you cannot grow. When you do not track your expenses, you give assumptions liberty to enter the group chat and if there is anyone you do not want in the group chat when dealing with your money, it’s assumptions.

When you track your money, you can see CLEARLY what you use your money to do. It’s fascinating because you might be thinking, “I do not eat out that much'“, but when you track your expenses, you can put a number to “that much” and usually that number is outside of the ballpark of whatever number you had previously assumed to be “that much”. See why we have to remove assumptions from the money confidential group chat?

What does tracking do for you?

Tracking your money provides also clarity on your likes and dislikes. It lets you know what you like, love, hate and couldn’t care less for. Honestly, you track your expenses and realise that as much as you enjoy getting your nails done, you aren’t doing it that often, meaning you may not like it as much as you tell yourself. Or, on the other hand, you may be telling yourself how much you absolutely hate movies and you never watch TV, but your expenses show you paying for monthly DSTV, Netflix and weekly visits to the cinema.

Beloved, the numbers do not ever lie.

In addition to the above, tracking your expenses gives you the ability to have a bird’s eye view of your lifestyle and allows you to build a personal budget that you’ll be more likely to follow since all the data you will be using comes from your actual real-life current expenses. Instead of a budget based on some arbitrary ratio that doesn’t take into account the realities of your actual lifestyle.

An added advantage of tracking expenditure is that it cures the delusions surrounding the idea of how much we can cut out of our expenses when we start getting serious with our savings. It gives the most realistic snapshot of what your spending is like, and then you can personally identify what you can do without because you know what you are spending your money on and the why behind that certain expenditure. Think of it like this: what is the point of saying you are going to put aside X amount into a savings pot, and by the 10th of the month you dip into your X pot because Y came up reducing it to Z? Now you are upset with yourself because you did not stick to your plans.

Tracking your expenses saves you from making unrealistic money plans and helps you follow through with the real ones.

How do you track your expenses?

So, how do we track our expenses? By simply writing out all the money we have spent and what we spent it on. Some people use good ol’ paper and biro in a little notepad they carry everywhere with them, so they don’t miss any bit. Some use digital banks and personal finance apps such as “Monzo” (in the UK), and “Mint” (if you’re US-based). The Kuda bank app (for those of us in Nigeria) apparently helps you group and by default track your expenses too.

Since all your spending has come from one account in the last week, the probability of missing out on any expenses has been reduced to ZERO. This means you have the most complete picture of all the money you have spent since July 1. This means that you have removed an extra barrier to tracking your expenses. At your money confidential meeting this week, I implore you to open that banking app, download your bank statement for the last two weeks. Then launch preferred means of tracking your expenses and begin to transfer and populate.

Where can you find expense-tracking tools?

Personally, I use spreadsheets (Microsoft Excel/Google Sheets are both fine), for a number of reasons, top of which is, it requires little to no effort to utilise on my part, it’s very easy to manipulate and I can customise my tracked data. I mean, I can literally tell you how much I spent on Tollgate fees for the whole of 2018**. It is also super easy to replicate for other people. If you want a copy of my customised excel expense tracker please send an email to peers@peermentorcircles.comand you’ll be sent a copy along with instructions on how to use it. If you’d rather not, a cursory google search should present tons of excel expense tracking templates.

How do you get past your spending tracking hang-ups?

While the concept of tracking expenses may excite some people, others might be apprehensive when they have to look at the numbers or view the results. All I’ll say is while money innately has value, it is by nature, amoral, i.e. it’s neither good nor bad - it’s simply money. All it does is serve the purpose you have given to it. Tracking your expenses lets you see what purpose your money is serving; it lets you course correct as realistically as possible while giving you an aerial view of the journey your money is on. So, think of tracking your expenses as using a compass on your journey to financial freedom.

Till next time, I leave you with the immortal words of Jermaine Dupri

“Money ain’t a thang”
Jermaine Dupri

Edirin

** NGN 60,800- if anyone is interested. Also good ol' days of N120 toll gate or what? The 2019 number is making dizzy.