.: About savings and Finance :.

Monday…. and such a terrible monday as I’m back to work. Can I go back to my holidays please? Need to wait for March now. Seems a carrot quite far away.

To be on a different note today, I’ve decided to share with you some words around Savings and Finance, as you know many of you are trying to follow up with the new year resolutions.

Most of my close friends know that I track my finances per transaction, that’s right. I’ve created an excel file on google drive (so I can access it both from home and work) and I go to my bank account and track each transaction against each category.

Why should you track your finances?

It will help you know how much you are spending in each category and define where you want / should cut. For example you know all those take away orders? Maybe you can cook more from home. If you need inspiration you can see recipes like Jamie Oliver 15m meals. I also follow a couple of bloggers that share some quick inspirations:

If you’re spending too much on gymn and you rarely go, why don’t you do some outdoor activities? Running in the park next door, or just join an activity with friends or just long walks over the weekend. It can be as easy as taking the stairs rather then the lift. Every step matters!

So you can see where I’m going right? It’s quite important that you understand how you are spending your money, otherwise you’ll never know where to cut and where you can spend more smartly. Also, if you don’t know how much you spend it will be even harder to reach your savings goal. It’s important to track not just the expenses but the savings as well. Once you see that little pot growing it will give you good motivation to stay on track.

How often should I track it?

How often you track it’s up to you. I try to check my bank account every two days, but was only tracking every two weeks. Once I was 2 months without tracking, which was a pain, as normally the banks only have 2 months worth of detailed bank statement, and it took me a couple of hours to catch up. The more often you do the easier it will become.

Which categories should I create?

I would say, keep it simple! The simpler it is, the easier it will become to maintain it. I change my categories along the way depending on what makes sense. For example, because I spend too much money in going out for dinners, my food bucket is split between grocery shopping and dinners and also week lunch meals. But you can keep it simple and just have the main bucket: Food.

Any advise on how much we should be spending in each category?

Well, the rule of thumb is more or less like this:

I track myself against this, which means I need to map my own categories into these global ones. My 2014 was more or less like this

I live in London, so you can see my housing expense is quite high. Inside housing I also include all utility bills. Food, as said above I’m badly behaved and spend too much money eating out. I take the public transport and we have an economic car, which means we save in transports (which also includes parking and the car insurance).

I also have a simple graphic that shows my monthly expense against my savings for each month. I like pictures 🙂

Tip: Because I’m using excel, I had to create the template only once, then it becomes really easy to reuse it every year, as the graphics will change based on the cell values. So it’s a one off exercise really.

Which software is available?

There are loads of options to track your expenses. I’m using basic excel because I’ve done this template ages ago and I find it really useful to leave all my documents on google drive. But there’s loads of clever software out there, which will allow you to download your transactions from your bank account or credit card and upload directly using the software. A friend of mine (who’s much clever than I am!!!) is doing that.

Some options below:

  • Money Dashboard – Seems to work pretty well for UK based accounts and is also very easy to use (free to use I believe)

  • BankTree – Not sure about this one to be honest, but this is how it looks like

  • Mint – For those of you that like phone apps, this seems to be quite a popular one. If I was starting now, I guess I would give it a go.

  • Buxfer – Seems easy to use with a small subscription of £2.80 and it seems it can generate really easy-to-use reports

Whatever option you choose the most important feature is that it works for you! The last thing you want to do, is to spend a lot of time setting up a tool which you will give up on using after a bit!

For any other additional information let me know, I will try to help the best way I can. Hope this information was useful 🙂 Enjoy your week

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