Weekend Engagement - Tracking 12 Years Of Expenses

Do you make a habit of regularly tracking and budgeting for your costs and expenditure? Explain how and why and how it benefits you, with examples.

Personal finance is something that I have a strong interest in, and tracking expenses and budgeting costs is a big part of it.

My tracking/budgeting has evolved over the years as I gradually understand my spending habits better, and I realise there is no one-size-fits-all approach when it comes to these things, which is why they call it personal finance.

Stage 1: Tracking Every Single Expense

When I was younger (i.e. more than 10 years ago), I tracked every single expense and categorise them, with the help of apps of course. I think I used an app Toshl Finance (that was many years back), and the data analytics and user interface was very easy and comfortable for me to do the records.

After 4 years of diligent recording and tracking, I realised this exercise was not as meaningful as when I started. This was because most of my expenses were quite routine, and with 4 years of data, I sort of knew how much I am spending on food, transport, entertainment, etc. It was not excessive (at least in my view) and there was not much room to trim these numbers. So having obtained such awareness of where my money is generally going, I stopped tracking every single expense.

Stage 2: Tracking My Net Worth

With that, I moved to tracking my net worth. Using my income and the changes in the net worth, I could easily derive my expenses using the difference. For example, if your income is 1,000 dollars and you realise your net worth only increased by 200 dollars, this means that you have spent 800 dollars.

While this drastically reduced my daily effort of keying into my app every single expense, I lost most of the granularity of where my expenses were going. But given that I already had familiarity with where my expenses were going over 4 years, I felt that monitoring that aggregated figure was sufficient.

This is my expenses over the past 12 years! From 2011 to 2022!

You might notice that there are quite a few colours. As the tracking evolved, I realised some of the expenses were different in nature, and it still made sense to track my expenses in big broad categories to differentiate the various type of expenses. So while it is not the level of granularity of Stage 1, it is more meaningful than just having one aggregated figures.

For sensitivity reasons, I shall not reveal what each colour/category means. Haha! But I think some observations that one can make, for example, would be that some colours are more volatile than others.

As for my personal level of expenses, I think my expenses have gone up in general due to various reasons, e.g. personal commitments, lifestyle inflation and of course the real inflation. It wasn't a big issue since my income grew over the years as well. There was a dip in 2020 (probably due to Covid lockdowns) but since then, the trend is back up again. For me, the level of expenses is currently manageable, so unless there is a huge leap in the levels, I think I am managing my finances decently.

So that's all for my sharing this week! Hope you enjoyed reading and let me know if you have any comments or any budgeting tips! Have a pleasant week ahead!