Congratulations to all of you who tracked your expenses for January!
That’s not easy to do. Well, it’s actually dead simple, but life is crazy and we’re just piles of meat, so remembering to track every little thing for an entire month is a lot easier said than done.
Maybe you used my free template, maybe you cooked your own, or maybe you used Notes or some bank or finance app. Maybe you only tracked two weeks of spending and just estimated the rest. It doesn’t really matter. What matters is that you have something that you’d consider a pretty accurate representation of all the “money going out” for January.
Now it’s time to take a closer look.
> Sort descending: My first move is always to sort my spending by the “Amount” column, from highest to lowest (on Google Sheets, this is “Sort Z to A”, in newer Excel, it’s “Sort Largest to Smallest”). If you’re like me, you’ll see some annual payments at the top of the list. I pay an annual subscription to Adobe to use Photoshop, and I pay that license in January. Those are eye-catching results, but they’re not the things I’m concerned with.
I scroll down the list until I see the first thing that I can barely remember buying. Maybe it’s a new polo shirt that I bought for ?2500. Or maybe it’s the 6-book Dune commemorative box set that I bought that hasn’t even been delivered yet.
My next move is just to try to notice any recurring things or patterns. As I’ve mentioned before, the first time I did this exercise, I realized that my daily (or sometimes twice daily) taho habit was actually quite expensive over the long run. But the key is just to “notice” those recurring things.
> NOTE: What do you feel? For me, when I see that polo shirt or book set and I don’t even remember them, I feel a sense of shame. If I think back to when I made those purchases, if I’m being honest with myself, I will probably find that I bought those things searching to feel a feeling.
Maybe with the shirt, I was feeling a little low and thought a new Penguin polo would be a nice mood booster. Maybe for the books, I was feeling nostalgic or like I was losing touch with the interests and hobbies of my younger self. Maybe for the taho, what started as a fun little treat has wormed its way into my brain as something that I think I “deserve” each day, so that now I have a baseline taho PLUS a “treat” taho later on in the day if I’m feeling extra special.
When I have this kind of dialogue with myself, seeing the motives behind some of my non-essential spending can really help me make changes. The next time I wander into Mango Man to check out shirts, I think: “Do you really need a shirt, or are you just looking to buy something to feel something?” The next time I start to wander down the street to the taho guy, I think: “Do you really need a snack or are you just trying to avoid looking at your January spending data to write that personal finance article?”
Figuring out the “why of the buy” is (for me) more important than anything else.
> Prorating annual expenses: To make this monthly tracker more accurate, we need to prorate some things. I only pay my property taxes once per year, so I take that figure and divide it by 12 to prorate that annual expense into the amount that I “spend” in that month on something. That’s not what is happening on a cash basis, but if we’re trying to make some insights it doesn’t help to skew the numbers by counting massive annual payments or failing to consider the prorated impact of payments made that were not captured by the January spending tracker.
> NOTE: Keep a “live” tracking doc: Digital life is messy. It’s out of sight and out of mind. You will no doubt forget annual expenses that you pay that you will want to include in your audit next time, so my advice here is to keep track of these as they come up somewhere on your phone. For me, I have a note in my Notes app that I use to remind myself of all the things I pay for annually.
> What was your “core” spend? Here is where we get down to business. We need to separate out all of the expenses that are critical to maintaining your life.
In my template, I have a column labeled “Need/Want”, so if you used my template and filled this out it’s going to be as easy as doing a quick filter/sort. But if you did it by hand or on notes, just go through and star or highlight the things that are non-negotiables for your current life: rent, mortgage payments, car payments, Meralco bill, transpo to/from work, basic personal items (toothpaste, condoms, tampons, etc.), insurance payments, medicines, condo dues, phone load.
When I say essential, I don’t mean, “take this away and I die”, I mean, “take this away and my life will materially change”.
For me, if I don’t have YouTube Premium, I just end up watching more ads and nothing truly fundamentally shifts for me in my life. But if I don’t pay Adobe for a license, I can’t edit my dumb memes, and if I can’t edit my dumb memes, maybe lots of people would stop reading my newsletter. And if lots of people stopped reading my newsletter, maybe I’d have to go back to working full-time as a lawyer, and NOBODY WANTS THAT. Add all those things up.
That’s your monthly core spend.
> Add in your income: Now we add in our income. For corporate types, this is pretty straightforward. You just include your after-tax monthly income, plus whatever other consistent sources of income you have. If you do freelance video editing as a sideline, that’s not going to be very consistent, but just try to come up with a conservative monthly average. If you are in sales and there’s a busy season and a slow season, maybe try to prorate your annual commissions (if they’re pretty consistent) to get a clearer picture of what you can earn. Make the same conservative estimate for any dividend stocks you own, or any interest you might earn on money people have borrowed from you.
> NOTE: Stock gains are not income: Do not count stock gains as income. Unless you’re able to consistently draw your gains out of your account to fund your life, then we’re just ignoring all of that for now.
Likewise, we aren’t counting property appreciation as part of this exercise. We’re only talking about things that pay you money without needing to be sold to realize the gain. Socialists be like, “but what about the labor that we’ve sold to the capitalists in return for our wages?”, and you’re right, but this isn’t the time or place! Wondering if choking on the fumes from the busted engine of capitalism is what we should be doing? In this economy? Most of us are just trying to pay rent, eat, and stay healthy.
> Income vs. expenses: The payoff. Compare your estimated January income to your estimated January expenses. Subtract your expenses from your income. Is it positive? Negative? How positive or negative? Multiply by 12 to see the estimated annualized gain or loss for 2025. Is this in line with what you thought, or are you a little surprised by the number?
> What’s next? Now that we have a better idea of our baseline spending and income, we have some essentials to take care of before we can move forward with the idea of investing.
This is just a personal belief of mine, but I don’t think anybody (whether young or old) should be investing without an emergency fund, so we’ll talk about that very soon. Maybe your trend is for positive net income at the end of the year, but that number isn’t as high as you’d like it.
The world is full of tips on how to save money, but I’m going to focus on how to make more money. There are no secrets here. No hacks. Everything I’m going to say is already known, but it can be helpful to hear it (or see it) said to jumpstart your brain into action.
> Tell me your feedback! Please take this survey to tell me all about your January personal spending audit experience. It takes about 2 minutes to finish, and I’m giving away ?10,000 in Grab Food vouchers! One ?2k prize, five ?1k prizes, and twenty ?200 prizes.
MB BOTTOM-LINE: It’s not essential to have done all the tracking to take part in this exercise. It certainly helps, and you probably won’t uncover the weirdest little spending facts about yourself without doing some kind of audit, but this is the kind of activity that is helpful in any amount, at any speed. Even just using high-level estimates of your income and expenses can help you make better spending and earning decisions.
I’m planning to run this spending audit again in 6 months, so I would really appreciate it if you could take a moment to tell me about what you learned doing this exercise (survey link).
Did you find out anything surprising?
Did you make any insights into your spending habits?
What methods of tracking worked the best for you?
Was your core spend higher or lower than you thought?
I’m hoping to share some of this data with readers to see if the data changes the next time we run this exercise for the month of July. If you have any tips or tricks, share them with the class!
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