To Know Where You Are Going, One Must First Know Where They Came From


I love tracking my expenses. There is something so satisfying about knowing exactly where my hard earned money is going. I acknowledge I am likely a minority in this regard. So many people cringe at the thought of expense tracking or budgeting! Imposing limits, dealing with spreadsheets, tracking spending….brings about as much joy as tuna salad. Why do you have good intentions when it comes to personal finances but fall flat when it comes to follow through?

You are starting too big.

One of my aunts provided a challenge last year. The task was simple: every day write on the calendar where you spent money. At the end of the year review the information. I did it and let me tell you, it was very eye opening.

I learned that my biggest expense, by far, is my home. Now this in itself is not particularly earth shattering, most people can expect this to be their biggest expense. What was surprising, was the percentage of my total expenses that my home consumed….47%!!!!! Why is this important?

It doesn’t matter how many coffee’s I don’t buy, how many shopping trips I pass up, or how many times I pass on ordering pizza on Friday night. If almost HALF of my money is going to my home, there will only be so much money left for everything else.

I knew prior to doing this exercise that my home was a big expense – that is why I got a roommate at the beginning of 2015. But seeing the real numbers in front of me confirmed that the decision was the right one – AND that I needed it to continue. Where previously I thought of the roommate as a temporary solution, I realized that if I wanted to continue living in my home, I needed to do so at the expense of sharing it with someone else.

This realization is so important. I can make a budget, track my expenses, get frustrated that I don’t have more money, but it’s all for relatively minimal return if I don’t acknowledge the main source(s) of my spending (and accept or change them).

So my plan for 2016:

  • Continue with room mate
  • Determine how to increase passive sources of income
  • Eat out less! (this was the next biggest culprit when it came to spending!)

Also of interest – I don’t spend nearly as much on clothes and entertainment as I thought! Data is a powerful thing.

As a final parting thought, you may notice you don’t have to CHANGE your spending habits to complete this task. All you are doing is collecting information. Once you have information, you can make a plan moving forward. Sounds nice doesn’t it?


One thought on “To Know Where You Are Going, One Must First Know Where They Came From

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