An increase in revenue or a decrease in expense leads to the same benefit of increased saving and investing. Pivot your point of view, track and reduce expenses and enjoy the extra money.
Imagine that your boss grants you a 10% rise starting next month, you’ll be super happy! First thing would be to save this money, not to spend it. Guess what, your boss can actually give you more, but you have to work for it. Do you still sign in? Assume yes. You might wonder where the catch is. It is too good to be true, right? Indeed, there is a catch.
Focus on what is within your control
Imagine that your boss is simply yourself, not somebody else which you depend on.
The extra money you get for saving isn’t an increase in your income, but a reduction of your spending. If you think it that way, when you reduce your spending by 10%, and plan to invest the savings, it will have the same financial impact as having a 10% rise. It has an even more significant impact as you wouldn’t have to pay tax on it! This is the reason why the FI community is so focused on tracking expenses and having minimal spending. It has much more power than a salary increase, and it remains within your control.
So go find or create your own expense tracker (can be a free App, a Google spreadsheet, a paper notebook…), it is the first step towards FI.
To help you start, I am sharing with you our Google Sheet that we use for tracking our expenses. It is a read-only version. So please copy the sheet so that you can adjust the categories that matches your expenses. As we mentioned in a previous post, Logging your expenses is key.
Moreover, I have read and listen to many blogs and posts. One common recommendations from people who have reached FI is TRACK YOUR EXPENSES. I couldn’t agree more. First, it is inconvenient to track expenses. So, if you are diligent, you will spend less money so that you have less expenses to track. Second, by tracking, you will observe your spending by categories, and you will realize that there are some categories that could be reduced. Third, you can only improve what you measure, so track your expenses so that you monitor your progress. By making small changes in your spending, you will be quite surprized on the effects it has on your savings.
Use our FREE customizable multi-currency tracking tool
After using several ‘free’ Apps to track our expenses, we finally decided to create our own tracking tool. Indeed, we needed the tool to be Free, available 24/7, offline, with customisable categories, multi-user and Multi-currency!
Here is the link to copy the >> Google Sheet Track Exp. <<
It is free to use, just acknowledge the source www.FireCrackersJourney.com whenever you are sharing the file.
The file has 3 tabs: ‘Entry”, “Analysis”, and “List of categories”.
Categorize your expenses
The “List of categories” registers all the categories that you may use to regroup your expenses. I am sharing our way to bucket our expenses. You may wish to reduce, increase, rename and/or even translate the categories to your needs.
Log your expenses
The “Entry” tab is the main sheet. On the right side, there is the {Base currency} cell in which you want all your expenses to be tracked back to this currency. Indeed, when we travel, we may go to places which have their own currency. We usually travel several times per year, and we want to account our overseas expenses with the same detail level as when we are at home.
Below the {Base currency}, there is the {Currency table} which lists out all the currencies of our expenses during the year. There are GoogleFinance formula which extracts the exchange rate between the {Base currency} and the currency of the expense. Cells are grey and automatically updated based on market rates.
Finally, on the left of the screen there is main sheet. This is where you select the {Date}, the {Category}, the {Amount}, the {Currency} of the expense, and you can even add some {Details}. Every time you have a new expense, you insert a new line and copy/paste the formula from an existing line. In our experience, every month, we were creating as many lines as per category, and we would insert in the same line, all the expenses in this specific category. But it is up to you to create a new line for every expense. I would suggest not to make it too detailed or cumbersome to key-in the data, otherwise you might deter yourself from logging in your expenses. Keep it simple so that you have the incentive to tracking all your expenses. The columns “F” ={Base Currency} and “G”={Month} are technical and used only for the “Analysis” of the expenses.
Analyze your expenses
The “Analysis” tab is a pivot table based on the “Entry” sheet. This tab will automatically update itself based on the expenses that you log. It is very useful to visualize rapidly your expenses aggregated per category and observe the trend over time. I haven’t built a report or chart on it because I didn’t see a need for it. However, you can easily create your own in Google Sheet.
Add another user
You might need to share the file with your partner, so that he/she can also inserts the expenses. If you prefer to keep the expenses separated, but still have a consolidated view on the expenses, you can either create a new column or use the existing {Details} column to type who made the expense.
Allow offline and 24/7 availability
Ultimately, you can add the file on your phone using Google Drive and make it “Available Offline”.
Congratulations, you now have a FREE category-customizable multi-currency expense tracking tool!!
And you, what are the tools that you use to keep track of your expenses? Have you found the killer tracking expense App? Which feature would be critical to add? Please share your feedback with the rest of the community. In the meantime, Good luck and keep tracking!
Image credit: pixabay.com
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