I’m not that good at remembering events. However I do recall exactly how we started saving money – and it all started by chance back in 2007.
It all started when a credit card got hacked
…and it wasn’t even ours.
It was a friend who had her credit card hacked. She discovered it by looking at her statements: there were lots of purchases made in Poland (she was living in the UK at the time).
We thought it was great she checked her statements regularly. We weren’t that good. What was the last time we checked ours? We thought someone could be stealing from us right now, and we wouldn’t realise. At first we laughed about it – then we decided to have a look at our statements! 👀
SHOCK!! Someone was depleting our bank accounts!
Unfortunately (or should I say, luckily) in our case there was no internet hacker to blame: our bank accounts were being depleted by …ourselves!
The statements were clear: we had been spending more than what we were earning – like, 30% more! – and this had been going on for months! The only reason we hadn’t run out of money yet was the periodical payment of company bonuses, which would top-up the accounts and hide the problem.
We also realised that during the course of the month we had no way to determine how our total expenses were growing. Waiting until the end of the month to receive a statement and then discover we had spent too much was obviously not a solution.
The only way would be to start tracking our expenses.
We began tracking our expenses
The following day I created a simple template and printed two copies of it, one for each of us. It had 4 columns:
- Item bought
- Item Cost
- Cumulative amount spent
At the beginning, we just wanted a simple way to notice when our outgoings exceeded our salaries. So our life didn’t change – we continued going out and buying stuff just as much as before. The only difference was that, at the end of the day, we would write down how much we had spent during the day.
We found it super easy. It was actually great we were doing this together, as sometimes one of us (usually, me!) would forget to write down the expenses, and the other would remind them.
To begin with, it was really useful to see the timing of our expenses. We would update the Cumulative Amount Spent every day, and if was growing too close to what we had earned in the month, we would just delay the next purchase, or the next dinner, to the following month. This was great because we didn’t feel we were renouncing to anything – we were just delaying it for a few days. This allowed us to stay within our limits from the very beginning.
Soon after, with a couple of months of expenses tracked, we started seeing some patterns emerge. For example, I am a stationery junkie (I could spend hours at Muji or Paperchase..), and it was clear I was spending too much on notebooks, pens, and the likes. At that point, a few adjustments here and there allowed us not only to breakeven, but to start saving money too.
More than 12 years have passed since we started tracking our expenses. We still do it to this day (have a look at our simple tracking system), and we found it invaluable – even now that our spending habits have somewhat stabilised.
I am truly convinced that simply recording what we were spending has enabled us to save money, and has brought us closer to financial independence.