Level 3: Tracking My Expenses

Level 3: Track Your Expenses

The What, When, Who, How and Why of tracking your expensesThis post describes how I started tracking my expenses and what tricks I used. If you’d like to read more about the task itself, have a look at Step 3: Track your Expenses where I describe the procedure in more detail.

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After making some initial progress towards Financial Independence and after having remained on level 2 of the process for a while trying to identify my goals of this mission, I am ready to move on to the next level of this journey: starting the third step and registering all of my expenses.

I know that having a list of all my expenses will be an invaluable resource during many stages of this mission, as many of the steps will rely on a detailed insight of what comes in and what goes out every month, so I am totally committed to start keeping track of everything that happens with my money.

The infographic on the right tells you more about which factors to consider when registering your expenses.

What

I’ll be registering all my cash, credit card, debit card, transfers, standing orders and other payments from my checkings and savings accounts as well as any payments from the joints accounts I have with my husband.

When 

I am going to try to register any expenses in the moment as much as possible, but of course I know there will be times I’ll forget and I have certain payments automated, so I’ve decided to take 5 minutes at the end of each day to check I’ve registered everything, by looking through my wallet for receipts and logging into my checkings accounts. My savings account I’ll check just once a week as I know that currently only has 2 movements a month: when I get my interest and when my automatic transfer gets in. In this way I know I am least likely to miss out on any. I have a reminder in my bullet journey to make sure I do this every evening.

Who

My husband is sooo not going to register his expenses so I know there’s no point insisting. He has his own individual accounts that he is of course responsible for so I won’t get involved in that or ask him to track his expenses, but for our joint accounts I will keep track of things. Where possible I’ll ask him to pass on receipts but I’ll probably just log into our account daily to check what’s happened and to ask him in the moment if I need to know more about a particular expense.

How

I have tried different options to log my expenses and I have in the end decided to go for YNAB – short for You Need A Budget. I love it as it is a relatively easy to use programme and it also has several more advanced features that you can decide to start looking into more once you get the hang of the programme. YNAB can be used both online on your computer as well as by downloading its app and that for me is a key necessity as I’d like to be able to insert expenses both on to go in the moment as well as when I am sat at my desk.

Of course if you’d rather stick with paper and pen option that is no problem either and the advantage there is of course that you don’t need any type of technology to keep up your new habit.

Other alternatives include using a digital programme such as Microsoft Excel or Mac’s Numbers to track your money as well as other apps widely available – just search for them and see which one you like best.

Why
My own main why is that I want to gain insight into my spending pattern so I can identify where I can save money in order to boost my savings for long-term goals I have, the most obvious one being reaching Financial Independence of course.

These are my own 5 key strategies to tracking my expenses. If you aren’t already tracking your own expenses, make sure to start today and read up about it in the detailed explanation in step 3: Track Your Expenses.

Step 3 Infographic: Tracking Your Expenses

The third step of the 100 steps to Financial Independence is focussed on tracking your expenses. You can read all about the how’s of this step in the detailed guideline or read about how I implemented this step and started tracking my own expenses.

Below in an infographic that will help you with the 5 key questions related to tracking your expenses.

The What, When, Who, How and Why of tracking your expenses

Start tracking your own expenses today by using the checklist here to help you get started.

Level 2: My Financial Objectives

Level 2: Set Financial Goals

Step 2: Set Financial GoalsThis post describes how I implemented step 2 of the mission to Financial Independence. To read more about how you can set your own financial goals, please refer to step 2: Set Financial Goals

After making a commitment to achieve Financial Independence, the next level up is setting financial objectives. I wanted to set clear financial objectives that, although I was aware might still change later on in this mission when I dive a little deeper into different financial topics, would be my main anchors and most important outcomes of  my journey.

At the start of my own mission to Financial Independence I identified to following objectives I wanted to achieve:

  • Set aside money on a monthly basis. 

This is an important one for me as I am aware that I should be setting aside money for my future. I want to make sure that I add to my monthly savings regularly to have separate savings to rely on when I become Financially Independent.

Added to that I also wanted to set aside a fixed amount each month for various short term goals so that when the time comes to make a purchase I not only have money set aside but also know how much I can spend on it. This includes a yearly fund for (Christmas) presents, flights (I don’t live in my home country but luckily living in Europe it is easy for me to go back and see my friends and family from home relatively easily, but I do of course need money to buy flights!) and medical expenses.

Using the SMART goal setting method (see infographic further up), this would translate into: “Build up a 6 months freedom fund by January 2023 in case I end up without an income to cover my expenses during half a year, by setting aside €150 per month.” And the second goal: “Set aside €100 per month for specific targets including flights, presents and medical expenses to be able to use whenever needed.”

* If you want to find out more about setting financial goals using the SMART technique, put your email below to get a free worksheet you can instantly print and use!*

  • Plan how to become debt free

I have a (relatively small) student loan as well as a mortgage and whilst there are people who say you should pay off all debt as soon as possible, others are more cautious, bringing in arguments about interest rates, rate of return and inflation. All things that I couldn’t put together into a big picture or plan to know whether or not it was wise to pay of my debt as quickly as possible or not, as I didn’t know what these things meant nor how to use them to make a decision. As part of my financial journey I wanted to be able to decide if and how to pay off my debt as soon as possible based on knowledge I’d hoped to gather during this journey.

The SMART goal was therefore: “Know by May whether I should accelerate my debt payments, by understanding how inflation, interest rates and returns affect this decision. If I decide to pay down my debt aggressively, have a set plan to put into place by June.” 

  • Understand my pension provision

Admittedly I am still many years away from retiring (I’m in my 30s), but I didn’t feel comfortable not knowing anything about my pension and what that would look like. There are many stories going around that by the time my generation retires, our (state) pensions will no longer exist as they will have become too expensive to sustain. Not a great prospect so I decided I had to become proactive and learn what my own exact pension situation currently looks like and whether I needed to take steps to build in an extra safety net.

In SMART terms this would be: “By July I want to understand my own pension provisions projections I am entitled to and have a set plan to put into place starting that month if I decide to increase my pension contributions via a private pension plan.”

  • Learn about investing 

I never learned anything about investing and had no idea what shares and portfolios were when I set out on this mission. When people said they were investing part of me could only think that all those people were just bound to lose all their money soon, yet another part of me kept wondering why so many people were investing. Surely something must be attracting them into the market? Was there after all a way to make money on the stock market without a guaranteed financial disaster looming over? I wanted to learn about investing so that I could make an informed decision as to whether or not I wanted to start putting in some money too.

The SMART version was: “Understand what investing is and how it might apply to me personally. Decide whether to invest or not by August and have a plan to put into place by September if I decide to start investing.”

These were my four main objectives before I set out on my 100 steps mission. As you might understand I added in a lot of other objectives along the way and also modified some of the above, but knowing what I wanted to get out of this journey greatly helped me stay focussed and motivated. To read up more about setting financial goals, read the broken down explanation of step 2.

Grab your free worksheet to start setting your own Financial Goals here by leaving your email address below.

Let me know about your own goals below or on your favourite social media!

Level 1: My Commitment to Achieving Financial Independence

Step 1_ Commit to your mission to Financial Independence

Once I had decided I wanted to become Financially Independent, so that I could regain more control over my time and future, I was aware I had to make the following step: a commitment to my journey, a first advance towards the next level on my way to my ultimate goal of financial freedom.

In order to move from level 0 – my starting point – to level 1, I had to take full responsibility for my progress and dedication to that journey, to make sure I wouldn’t give up on it halfway through.

Following the 100 steps that I have laid out previously on this website, Step 1 is making a commitment to your mission. With the various ideas suggested in step 1 in mind, I have decided to do the following:

1. A sticky note

I’ve put a sticky note on my bathroom mirror. In this way I can see it several times a day, and especially in the morning, to remind myself of my mission. It currently says: “On a mission to Financial Independence.” but I might change the wording with time. You can find a picture of it here on my Instagram account.

2. An accountability partner

I have in fact found several accountability partners: myself and 5 others have formed an accountability group in which we have set ourselves a big as well as five small targets we’d like to achieve over the course of a year. We meet once a month to give updates and ask each other critical questions to provoke honest answers and make sure we live up to the targets we have set and to help each other remain motivated and on the right track. I’ve also got a weekly check in meeting with my partner to discuss progress on some of our targets, including my goal of achieving financial independence.

3. Use of social media

With the upcoming launch of my 100 Steps Mission to Financial Independence book (around June 2018), I decided I’d probably need some social media presence anyway, so I am currently using my Facebook, Twitter, Instagram and Pinterest accounts to put together interesting articles and images to do with Financial Independence and Money Wisdom. In that way I am not only letting others know about my journey, I also hope to inspire people to aim for more financial freedom.

4. My bullet journal tracker and diary

This is the one I am most excited about, as I really believe in the power of a tracker to keep your progress visual. I also find my bullet journal really helpful and motivating to use, so I have decided to get a new bullet journal that I use specifically to keep a log of my steps towards financial independence. I have started with a tracker for step 1, which is an overview of 100 steps, with each step represented by a square, that I will fill or colour in every time I have successfully implemented or completed a step. You can again find a picture of it here on my Instagram account. If you would like to get a free copy of this tracker, leave your email below and I’ll send you an email with a free download that you can print and instantly use!

5. My cat

I can’t finish the list without also including a special mention to my cat, Monkey, who ever since I started working on putting together my 100 steps, has always been faithfully sitting next to me, in front of me, right on top of my laptop, sprawled along all of my papers or in any other way close to me…. You can see her here “supervising” me writing this current blog post here. Whenever I work on the 100 steps she is there with me, keeping me accountable I guess!

And there you have my 4 (or 5) ways of committing to my goal of becoming Financially Independent. For more ideas or if you’d like to read more about the very first step of the 100 steps mission, check out this description of step 1. Remember also to leave your email below to get a free copy of the 100 steps tracker sent to your email.

I’d love to hear about your commitment or ways of making sure you will stick to your goal, so please let me know in the comments below or by posting a photo on your favourite social media.

Level 0: The start of my mission to FI

The beginning of my journey to create more freedom.

More freedom

Over 2 years ago I decided I wanted to have more freedom. Freedom to choose what I wanted to do with my time. Not having to get up super early day in day out to go to work, spend all my productive time in an office, work extra hours whenever this was needed (and working in education means there are ALWAYS extra hours needed!), to then come home being too tired to do stuff I actually enjoyed.

It’s not that I didn’t like my job, quite the opposite: I got (and still get) great please out of it and am able to shape my role in many ways. But whether I enjoy my job or not is not relevant: I decided I didn’t want to spend my entire working days for the next 35 year of my life in an office.

I wanted to be able to be more in control when it comes to my time. Being able to decide every day how long for, what to work on or whether to take a day off and go for a hike or a swim or a snooze or a picnic in the park or…. there are so many other things to do..!

Once I had determined this, an obvious problem arose:

“HOW TO CREATE MORE FREEDOM?” 

As I started reading more about my desire to create more freedom, I quickly found out that the best way to do so and get more control over your own time is by becoming Financially Independent. When you achieve Financial Independence, you have access to enough money coming in from passive income streams, that you no longer need to rely on your job’s income. Meaning you don’t need your job to pay your bills, which means that you can decide to do any job you want (or not) regardless of how much it pays. (There are in fact 8(!) stages of financial independence, you can read more about that in this article). Simply put, if you achieve financial independence, you no longer need to rely on working a full time job, which means you can free up a lot of extra time and freedom to do as you please!

Once I had the answer to the first question (how to become free) figured out, a second question emerged however:

“WHERE DO I START?”

This is where my search for a comprehensive guide began that would show me how to attain this freedom I dreamt about. As I learned with time, there are thousands of people out there who have the same aspirations to become financially independent and many others who have in fact already achieved this, yet the guide I wanted explaining how to do it all didn’t exist!

I looked everywhere on the web, Amazon, physical bookstores, podcast libraries… Nothing! No A-Z guide, 30 day challenge or 100 steps blueprint on how to become financially independent.

The 100 Steps Mission Book

Not wanting to give up my dream I decided that if that manual I was looking for didn’t exist, then I’d put it together myself. I wasn’t talking about WRITING a book, but about compiling ideas together that would be the substitute for what I was looking for.

Long story short… I DID end up writing a book. And as you might have guessed it became the 100 Steps Mission to Financial Independence. (I’m currently working with my editor to get it ready for publication.)

It’ll be out soon and I am convinced it can help many people looking for the same answers that I was looking for 2 years ago: how to get more freedom? More time to spend with my family? More time to travel? More time to do my hobbies? More time to volunteer or pursue a passion project? More time to…. to do anything you want really, without having to plan it around your busy work schedule and commitments! It will give you all the answers you are looking for and is a step-by-step guide you need in order to create that life you really want.

Until it’s out (around June 2018), I’ll be documenting my own experience implementing these 100 steps on my way to more freedom, so you can see how each little step has helped me get closer to my target of more freedom every day. Feel free to join me on this mission to start creating more time for you and your family too and let me know how you’re doing in the comments below.

The Health / Wealth Balance

How Investing in your health will also lead to more wealth
How Investing in your health will also lead to more wealth
The Health / Wealth Balance

Yesterday, on the last day of January (where did that first month of the year go??), I came across two interesting articles focussing on the link between health and wealth. I’m always super motivated to improve my health and in fact one of the main reasons to aspire FI is so I can hopefully enjoy more free time when still in great health.

Anyway, back to yesterday. What made these articles so interesting was that both focus on the importance of investing in your health and the compounding effects this can have long term on both your health as well as your wealth.

The first article: 30 Times and Then You’re Dead. Unless… How to Get Rich With Exercise, by FIIntrovert shows exactly how important it is to invest in your health if you are in fact  pursuing FI. If you are weary of spending too much money on your health, then I greatly recommend this article. FIIntrovert has made several calculations on how spending money on your health will over the long term not only benefit your health but also your finances. It’s really worth a read if you are needing a little extra motivation to look after your own well-being!

The second blog post was the announcement by Smart FI to join his February Plank Challenge: The idea being that you do a plank every day, starting with a minute and slowly increasing the amount of time each day. In his words: “The underlying theme of the challenge is that small incremental improvements over a month or a year lead to big changes.” I love how this of course applies to both your finances as well as your workouts. His post was also a call to other FI bloggers to join his challenge, so I decided to join too.

So here I am at the start of February with 28 days to do a plank a day ahead…! I’m very excited, as I have been wanting to focus on my health more anyway, so this will hopefully keep me motivated. As I write this post I have just done my first plank – unfortunately a minute was a bit too long for me, it ended up being 30 seconds… I hope to be able to increase this by a few seconds each day to 3 minutes at the end of February. I’ll keep you posted.

And if you are still interested in joining this challenge too, make sure to hop over to Smart FI’s post and let him know you are joining, as he’s got a blog roll / accountability listwith everybody participating.

Here’s to a good start of February and some new fresh goals to work towards!

Multiply your savings: A crucial step to attain financial independence

Today I am excited to introduce Patricia Sanders, who wrote the following guest article for 100 Steps Mission:

You can’t be financially independent if there is not enough money in your savings account. Job is not a piece of cake and you won’t get a pay hike several times in a year. A new job can give you a better package but this doesn’t necessarily mean your savings will improve. There are lots of factors to consider. For example, suppose you have to relocate for this new job, which means extra expenses. Unless the paycheck is very high, your savings won’t increase.

When you think about taking up a new job, you should research on the employee benefits minutely. What kind of benefits can you get from the new company? Will you get health insurance benefits, life insurance benefits, and transportation reimbursement? The less you have to spend on these, the more money you can save.

Let’s us discuss the other possible ways to multiply your savings because you can’t be financially independent otherwise.

How to jump-start your savings

You can’t retain your financial independence without improving your savings. You’ll always be dependent on someone for covering your expenses if there isn’t sufficient money in your bank account. If you’re a student, you’ll depend on your parents. If you’re working and don’t have enough savings, you’ll be dependent on credit cards for taking care of your emergency expenses. Recurrent fights over money issues will occur between you and your spouse.

  1. Avoid using credit cards excessively: Instant gratification is not good for your financial health in the long run. You can purchase anything you love with credit cards. But think carefully. If you can’t pay credit card bills later, then you’ll be in debt. Try to pay your bills in cash so that you don’t have to pay additional interest.
  1. Cut down your expenses: Make a list of your monthly expenses and find out how much you’re spending every month. Pick that one expense you can avoid every month. For instance, you can have a cup of tea in your home instead of buying it from outside. Cook a healthy meal at home and have it in your lunch. You’ll save minimum $600 every month. You can use this money to increase your savings.
  1. Love and follow your budget: Your monthly budget helps you track your income and expenses. Don’t ignore it. Make it your goal to stick to our budget every month. Set an amount you have to save every month. Suppose, you decide to save $800 every month. In that case, cut down on any expense that stops you from reaching your saving goal.Don’t cover extra expenses from your savings. You’ll need the fund for your rainy days.
  1. Create an automatic savings account: Do you lack the discipline to save money? It’s quite easy to forget about saving money when there are so many lucrative ways to spend money. The best way to improve your savings is to automate your savings.

How can you do that?

It’s simple. Get a percentage of your paycheck deducted automatically every month and deposit it into your retirement or savings account.

The best part of an automatic savings account is that you don’t need to remember yourself about depositing a specific amount into the account every month. You can save consistently. You’re not losing money. Rather, this money is increasing your savings gradually.

  1. Stop impulsive shopping: Create your shopping list and stick to it. Don’t make irrational decisions when you’re shopping. Don’t get lured by the attractive deals. Don’t purchase things unnecessarily. You’ll see lots of items in the sore. But do you really need everything? Think carefully. Why should you waste your hard-earned money on something that looks good but is not useful?

Conclusion

One of the primary steps you need to take for attaining financial independence is to increase your savings. It doesn’t matter how much you can save. The important thing is that you can save some amount every month. It’s a habit. When you eliminate extra expenses and lead a frugal life, your savings increase automatically. Just don’t misuse the money you save, You can use it to make a down payment on your new house or can use it to help your child cover his/her tuition fees.

Patricia Sanders is a financial writer and a blogger as well. She has been associated with DebtConsolidationCare for a long time. She writes regularly on her personal blog yourcardinalpoint.com on a variety of topics and she also contributes her valuable posts to different financial communities, blogs and websites too. You can also check out her social media profiles on Facebook and Twitter for more information.

Day 31 / 31 Set Goals and Visualize your Dreams

Day 31: Set Goals and Visualize your Dreams
Day 31: Set Goals and Visualize your Dreams
Day 31: Set Goals and Visualize your Dreams

Congratulations!! You’ve made it to the last day of the 31 Day Challenge to Financial Excellence! Some days might have been easier and others more difficult, but you held on and continued until the end. That’s a good sign as it not only means that you’ve probably made some huge progress in many of your financial areas, it also indicates that you are much more likely to appreciate the progress you’ve made and to keep up giving financial planning a prominent place in your life.

And that is also the very last challenge of this series: to set goals and to visualize your dreams in order to keep moving forward even now you’ve come to an end of the 31 Days. Continue reading “Day 31 / 31 Set Goals and Visualize your Dreams”

Day 30 / 31 Your Children & Finances

Day 30: Your Children and Finances
Day 30: Your Children and Finances
Day 30: Your Children and Finances

Whether you have children on your own, grandchildren or (adopted) nieces and nephews or plan to have children at some point in the future, you can play an important role in educating these children financially, especially taking into consideration how little most schools incorporate personal finance into their curriculum.

Save money for your children

The first thing to do, is to set aside some money in a savings or investment account (again it doesn’t matter how much or little) so you can start growing some money for your children. Not only will this once they are a little older give you a great topic to discuss with them to show them the power of compound interest, it also makes for a great 18th, 21st or wedding gift. Continue reading “Day 30 / 31 Your Children & Finances”