Tuesday, April 03, 2012

Sharing my monthly ritual

I just finished tidying up my month end accounts. I've been doing this for quite a while, so it didn't take too much time as all the necessary process had already been routinized and it's just a matter of clicking the right websites and recording down some numbers. Let me share what I do every month end:

1. Open up my excel spreadsheet. There are 2 books that needed me to fill up. First is the monthly expenditure. In the past I used to record all my expenses, big or small, onto that spreadsheet daily. But these days, I tend to consolidate over a few days to a week before putting them into the spreadsheet. I realised that I don't need such precision and accuracy now, because I already know what my spending pattern is. I take that as a reason to reduce the amount of work to do some tracking (it's not much work even if I do it on a daily basis, but a few minutes shaved off is still a bonus haha!)

After filling that up, I'll do up my second book -  networth. This means going to the respective websites, log in, and record the following:

Group A: Amount at month end of all my personal and joint bank accounts, as well as spare cash in the drawer

Group B: Amount in the money market fund

Group C: Amount of money in stock portfolio, based on latest market price

Group D: Net surrender value of whole life policies

Group E: Amount of CPF in various accounts

I do not take into account the market price of my HDB flat, but neither did I take into account the existing liabilities in terms of the mortgage loans. I will treat my networth accounting as such for similar asset that I had borrowed money to get it.

2. I'll also take the opportunity to pay up all my credit card bills in full. I usually use my posb everyday card for day to day purchases. However, for big items, I'll use manhanttan card to do that. I used to pay using scb's debit card for the rebate, but thought that I should conserve more cash since I'm a bit tight in liquidity the last few months. Why? Look at my post on the financial bombs.

3. Lastly, I'll transfer a portion of the cash in my bank account over to a separate account. This will form the savings that I will need to do every month. I think the amount doesn't matter (but it does matter if you want to hit a particular savings target per year), it's the act of putting aside a portion of your income that is important. I always think that if you do not save a portion, even a small amount, when you have this salary that you are drawing currently, what makes you think you can save when your salary increased in the future?  Thus the habit that is inculcated is more important that the amount saved, at least at the beginning.

What's the point of tracking all these, you ask? I think the greatest pros of doing this exercise is to give confidence to your own financial status at any point in time. You will know what you have at a glance by looking through your books. This will allow you to make proper and realistic financial decisions when the time calls for it. At the same time, you will also be able to track your progress over time and see if you had been doing the right things financially. Too much debt? Too much spending on luxury items? Too little income? All these will be shown in the books that you keep, much like the quarterly financial statements that public companies publish for their listing requirements.

It's good to see yourself as a company, especially in matters dealing with finance.


Singapore Man of Leisure said...


Too much debt?

But you are not tracking it...

I can understand your mindset since you are paying down your credit cards promptly every month.

I believe you will one day own your own business and I am rooting for you!

You may not want to pay your suppliers (current liabilities) the way you pay your credit cards today.

Remember your financial bombs and match it with the no.1 reason why most new businesses fail within the first 2 years.

Even if you abhor debt and prefer to pay promptly, you may want to negotiate for a early or on-time payment discount. Negotiate for everything!

Although sometimes its better to have 120 days payment period instead... Low months; peak months?

Friendly poke from a friendly bard.

P.S. You may want to check with your accounting friends whether your "books" conform to our Singapore's accounting standards.

You don't practice double-entry?


la papillion said...


Haha, I didn't write it down in the post, but it's certainly not what you think it is :) I used to be like that, paying the credit bills almost as soon as I incurred it before realizing that I'm not benefiting from the free credit facility, a bridging loan, if you will. Since all of my credit card bills has a due date near the first week of each month, I pay near the end of the month, perhaps a few days short of incurring a penalty for late payment. This is about the best I can do to maximize the free 'bridging loan' offered by credit card companies.

I didn't track total debt because it's really simple. There's only 2 debts that I have (not counting credit card). Firstly is the housing debt - the huge amount stretching over 30 yrs. The second is a newly incurred car debt which last over 4 yrs. For debts, I prefer to see it on a monthly basis and check if my monthly cashflow is more than sufficient to cover it. Total debt won't change much on a monthly basis and it's kind of demoralising to see that figure remaining nearly constant month after month. Better to use yearly figures for total debt to see an appreciable drop.

In other words, I manage my debts not by checking the asset vs liabilities part of my networth book, but by checking the cashflow in and out in my expenditure book. The debts incurred on a monthly basis is recorded there :)

Nah, I didn't check with accounting friends if what I'm using is the standard format. I think it certainly doesn't conform :)

Singapore Man of Leisure said...


You are such a pleasure to have a friendly debate with!

Your lots of :) makes me feel at ease.

The moment you jump from self-employed to a business owner, you may move from net asset to net deficit.

Nobody (including me) likes to see red ink on the other side of the balance sheet. That's why most can't make that transition. Talk a lot, dream a lot; but no action.

I've faith you'll have no problem here.

Just checking your tyre pressure ;)

Derek said...

Hi LP and SMOL,

I enjoy the way you guys go about tracking your finances but it's definitely not for the faint hearted. Imagine telling my GF to track her expenses using your methodologies - I think she will faint.

I used to think that more is better but overtime, it is just too much of a hassle. My simplistic way is to track my bank balance at the end of each month and my daily expenses. It helps that I have no debts (at this moment) nor do I own a business. :)

la papillion said...


I welcomed a good discussion anytime :) Thanks for giving me a chance to elucidate the thoughts in my mind too, haha :)

Hi derek,

Hey, don't be too harsh on yourself :) I think my wife won't do this sort of tracking too, haha! I guess males and females do this sort of thing differently. As mentioned in one of the cbox sessions, I 'track' my wife's savings by looking at the end point - as long as she saves x% of her income, she can save whatever she wants. Of course, she also have to contribute equally to whatever shared expenses we have as a couple. I think that ought to give her a reason to save ;)

AK71 said...

Hi LP,

I recently paid a few thousand dollars to my credit cards in advance at S.A.M. machines to get more chances in a lucky draw to win a car. ;p

I wouldn't have to pay my credit card bills for a few months from now. My credit cards have credit. ;p

Lucky draw: One chance for every $50 paid. Hope I win. Hahaha... ;p

Anonymous said...

Nice to see Ur post !! U haven been writing for a long time

la papillion said...

Hi anonymous,

Yea...been a while :) haha

Sanye ◎ 三页 said...

Hi LP,

Interesting way to keep track of your finance.

I do it with an application on Iphone. I track my income and expenses with it. Its always feel good to see that one is saving 30-60% of his income every month.



la papillion said...

Hi AK,

Wah, maybe you'll strike lucky again :) haha, keep us posted on whether you win the lucky draw :)

Hi sanye,

I agree. It does feel good to see that you have a big portion of your income saved aside :) I think an app for such purpose is perfectly fine :)

la papillion said...

Hi AK,

Wah, maybe you'll strike lucky again :) haha, keep us posted on whether you win the lucky draw :)

Hi sanye,

I agree. It does feel good to see that you have a big portion of your income saved aside :) I think an app for such purpose is perfectly fine :)

piggo said...

Haha AK! I did that too for the condominium last time... It's really hard :(