I lived on my own for 4 years in London – 3 of which as a student, and 1 as a working adult. For the first year, after paying rent and buying groceries, I had barely anything left. I didn’t even take public transport, instead walking everywhere because I would rather spend that money on food and trips. I used to look at my friends and wonder if they get a lot of pocket money given their lifestyles. But after awhile, I realised that my finances weren’t actually that tight! I had a fair amount of allowances, my parents paid for my school fees, so there was no reason that I had nothing left at the end of the month!
I realised that I had no clue where all my money was going. So I decided to write down every single cent I used. I started off with a little notebook where I penciled in every purchase, no matter how much or how little it costs. I quickly found out I was buying 3 quid Lattes once or twice every single day; it doesn’t seem like much but that’s nearly 30quid in one week, which as a student it’s ridiculous. Back then, 3 quid can get you a full meal set from Subway. I also have a thing for pretty pens and papers, which on their own are pretty cheap, but nobody buys just 1 pen or 1 piece of paper – so it all adds up.
Now I think, having a log of all your purchases is so important. I have now moved on to an excel spreadsheet with all my finances laid out in compartmentalized tabs, but as a start I think a little notebook is all you need to get going. It doesn’t have to be as complicated as mine, and it doesn’t have to be fancy. All you need is to note down where every single cent is going for a few months – how much, when and what. I think if you’re always short on cash, this is a great way to find out why. Even if you’re not, you can learn something about what you value the most and whether you’re spending money unknowingly on things that you don’t even value.
So what is it that you value?
Writing down expenses is a great way to see what it is that you value the most. And if you’ve spent on things that you don’t. If you’re looking over your expenses and find that you’re not paying off your top priorities before you splurge on something that you don’t need, it might be time to reassess. Did you buy that new limited edition eyeshadow palette instead of paying down your credit card bill? I’m not judging about what you can or cannot buy; but if you’re not paying off your top priorities and necessities first, then take some time to adjust your spending.
Writing down expenses is the very first step to budgeting. I like to know how much I need to spend on my basic needs – food, transport, and housing (if any). And I want to save, but not so much that I don’t have a life. I used to spend a lot on stationery – over S$100 a month. I really like pretty pens and cute notebooks. But I have greater utility with this S$100 savings a month and then spending it on a vacation. So writing it down, I realise that if I cut down in this area every month, even if not entirely, I will be able to afford an additional holiday a year which I will be much happier about.
I promise to touch on budgeting very soon, but before that can even happen – we need to know where all our money is going! So if you’d like to read more, please stay tuned! 🙂