Personal finance

On the advice of HH, I had started on this detailed tracking of my expenses and cash inflow at the start of this year. At first, the process seems very 'xiong', because everytime I spent a cent (including buying drinks/food and snacks), I'll record it on my handphone. Towards the end of the day, I'll record it on my excel spreadsheet. The spreadsheet have all the details broken down into food items, transportation, entertainment, bills, clothings and so on.

The idea here is to figure out where am I in this struggle to reach financial independence. If I do not know how much I spent nor how much I earned, it's hard to figure out where I stand. Most people (including me, in the past) will use a sort of mental accounting, like I spend roughly $5 on food everyday, or I spend roughly $80 per month on transport etc etc. After tracking my expenses for close to 7 months now, I have an excellent idea on what my spending patterns and percentages are.

Didn't some wise person say: What you track, you'll improve? Yes, I agree fully. There's even a graph showing how much I spend vs how much I earn for the months I tracked so far.


Whenever I see that the blue graph is catching up on the red graph, I'll work harder to increase my cash flow in and to decrease my cash flow out. I think it works nicely so far.

I've been tracking my total portfolio too. Total portfolio is what I define as the summation of all the money in my bank accounts, Poems MMF, SG stocks (at market value), HK stocks (at market value), Insurance (inclusive of bonus declared) and CPF. The only item I did not include is the money in my wallet and the coins in my coin pouch.


It's rather satisfying to see that, like the graph above, my 'coins' are stacking up slowly but steadily. Perhaps, like what many had shared with me, that upon marriage, my coin stack will drop one time and upon having a family with children, my coin stack will drop another time.

A few things came out of this exercise:

1. I knew how much my spending is, without resorting to agaration and guesswork. I even even how many % of my money is spent, itemised.

2. For the first time, I am no longer so hazy about my net worth in monetary sense. It gives a superb sense of satisfaction, knowing that I had accumulated a certain amount of money after working hard for this long. I said that because I know many friends who did not know their net worth. Most did not have healthy savings despite working for so long. My take is, if you do not know where you stand now, you do not know how much more to go.

3. This observation is quite a surprise for me. As I had to tally up my books for recording at the end of each month, there is a pressure to try to raise my cash inflow and lower my cash expenses to make the books look good. For example, I can kid myself that I'm spending less this month by doing somethings to push the actual spending till next month.

Suddenly, it came upon me that perhaps, that's what companies do too. They have to report every quarterly, so it's all too human to jiggle their books a little to make it look nicer, like what I do. Knowing this, I no longer treat quarterly earnings as sacred. Not even annual results in fact. Perhaps that is what old ben is trying to say - look at the earnings over a long period of time, not in one year and certainly not in 3 months.

4. This method of tracking expenses is insane. I realised that. It's painful and not many had the discipline to do it too. Even my financial advisor is surprised that out of many people he met, I'm the only one who tracked my finances like that.