I have always read about money management and negotiation for salaries. I’ve always wanted to become good at managing my own money but never seem to be able to apply the practices in these self-help books to my life. It will usually be a flash of excitement, then I will give up fairly quickly.
Last September, I started reading Vicki Robin’s book on “Your Money or Your Life” and it has made some gradual but significant changes in my life. One of the habits that stuck with me after reading this book was to track every single dollar coming in and out of my life.
Here are things I have learned after tracking every single dollar for 6 months.
- I stopped eating out & going to coffee shops.
- I stopped feeling guilty about spending money.
- I projected how many more years I need to work.
- I stopped eating out & going to coffee shops:
If I had a dollar every time I swear to not eat out anymore, I’d be financially independent just from that. I could never stop myself from habitually eating out. It is especially hard when you are hungry after a long day of working, and there is one thing on your mind, food. I was spoiled growing up eating whatever I wanted, and I kept that going well into my adulthood. So when I am hungry, my default is whatever my brain wants now, I must do everything I can to make that happen.
I realized that each time I eat out, I am spending approximately 2 hours of my salary ($30). That is 25% of my daily hard work to be just one restaurant meal.
After starting to track my expenses, somehow I was able to limited going out to eat at a restaurant to only 2-3 times a month. In the past 2 months, I only went out once (but that might have been the Coronavirus. . . ).
Tips I have learned:
Evaluate your restaurant spending after the restaurant visit. When I do this, sometimes I consider the spending worthwhile and sometimes I don’t. It is intriguing to find out after a day or two whether I found that restaurant outing was worth the money.
The times that are worth it:
- It’s a friend I am not super close to and I don’t want to be weird and invite them home for a meal.
- I went to a new restaurant that I’ve been meaning to try.
In those cases, I put a little “+” sign next to the expense, and write out the reason.
The times that are NOT worth it:
- I have had stomach issue afterwards because of certain allergies the restaurant cannot accommodate.
- The restaurant is not great: service is slow, or food is mediocre.
- I was super hungry and just wanted something instantaneously.
In those cases, I add a “-” and also note down the reason. This helps me to see what are some of the reasons why I want to go to a restaurant, and when I regretted going. It has helped me cut down on the times I go to restaurants.
Side note of getting super hungry and making bad decision, I have also started making food that can be frozen for a later date, like dumplings and buns. They have saved many nights where temptations were high, and Mr. CodeJunkie all of a sudden whips out the freezer drawer and finds my favorite food (Chinese food!) and gently guiding me from the being hangry and wanting to eat out.
I love coffee, especially specialty coffee, lavender flavor with almond milk. It usually costs $4-$6 (yes I know, I can’t believe I paid for this). I also love the social aspect of sitting in a coffee shop, listening to the low murmuring of people, and strike up a conversation with the stranger sitting next to you. I write blogposts in coffee shops because I feel that’s the place when inspiration comes. Sometimes I get a little peckish so I will order a beautifully made macaron, or a cupcake. These all add to my coffee shop bills.
I realized that I could make coffee at home, and also add as much almond milk and lavender syrup as I want. I can also put it in a fancy cup, and stare out of the window while typing on my MacBook, pretending I am solving world hunger.
I stopped going to coffee shops altogether. Truth to be told, I don’t think I am making that many more friends by going to coffee shops. I stopped drinking coffee altogether since last year, and have found tea to be more suited for my body.
Exceptions would be when Mr. CodeJunkie and I visit new places, I usually find hipster coffee shops for him to enjoy a cup of black coffee, and me, probably some sweet treats. Those coffee shops usually comes pretty neat neighborhoods to wander in as well.
2. I stopped feeling guilty about spending money on travel
My relationship with money mostly looks like when an ostrich facing unpleasant but life-threatening danger: by burying my head in the sand. On the one hand, I want to be the millennial that purchases experiences rather than physical things. I want to travel around the world and see everything. On the other hand, I feel guilty when I spend money on traveling, from flights to expensive hotels and fancy restaurants. I would be spending money during vacation without a budget (no guardrails!), but when I come back from vacation, I am scared to look at my credit card bills. I told myself, this is a “one-time-a-year” expense.
Vickie’s book encouraged me to look into the fundamental reason I want to travel. Is it for the social praise? I’ve definitely done some of those before: like visiting the Eiffel Tower. None of those things actually added much value to my experience. Rather, I just wanted to have an iconic photo and be able to put it on Instagram.
The book led me to question if those types of travel are the things I actually enjoy, and would want to keep doing. It also begs these fundamental questions.
- What are other things you enjoy during your travel?
- Can you get them without spending that much money?
- What is the fundamental value of traveling?
- Does destination change this value?
- Can your destination be closer, have less expensive food options, a different time of the year, and still achieve the same result?
If we remove the social praise aspect from travel, what is left for me is to see the endless possibilities of ways to living. I have met people who believe in things that I might consider completely outrageous or impossible and they teach me that there is never one way to live your life. Because of that, I changed my travel destinations to different and less touristy places in the world. I started appreciate local hikes and greeneries.
I also made a more conscious effort to not bring my phone (or put it on airplane mode with downloaded maps) when I am traveling, or even just going on hikes. I find that I am able to focus on the present better instead of using the energy to think about the best places to take an insta-worthy photo, or whether I should wear makeup to look more photogenic.
3. I projected how many more years I have to work
Being able to account for every single dollar coming in and going out of my life, I started building mathematical projections. I built one within google sheet but there are numerous sources online that helps you do this. If you want to learn more about my spreadsheet, let me know and I am happy to share a cleaned-up version of it.
When my total monthly expenses (blue) equals to my monthly investment earnings (orange), I can stop working. The investment “earnings” are calculated by using my total investment divided by 25, which is the 4% rule. Surprisingly, I met that in April this year (by accident). I have to continuously meet this in order to retire. But this also shows you, the less you spend, the faster you will get to your retirement (if nothing else changes).
I realized I am closer to become financially independent than I thought. This has helped clear my mind on what I should prioritize in my life.
Overall it was a success for 6 months, to be able to tell you exactly where I spent my money. Here’s a summary of it if anyone is interested.
What are your biggest expense after mortgage? Do you track your money? What’s your best way to save money?