Strategy #1: Discover Your Spending Pattern

When was the last time you kept your spending in check? If you’ve mostly been estimating your expenses in your head, we’ve got a better technique for you.

As a young adult, the first step to build wealth doesn’t have anything to do with how much money you save or how much you invest. In fact, the first thing you absolutely must do to take charge of your finances is to first discover your spending pattern.

A survey conducted by the Asian Institute of Finance (AIF, 2015) showed that 38% of youths rely on personal loans whereas 47% rely on credit cards to support their expenditure. For some, taking a loan to afford a new car or house is necessary. That said, it’s easy to overestimate our own ability to pay off these debts so consider your financial plans first before taking on a loan.

Tracking expenses will help you to :

1. discover your spending pattern
2. identify where your money goes
3. identify the leakages that create more debts or reduce savings
4. any other factors which may derail you from your financial goals.

To help you get started, here’s My Monthly Expenses Tracker worksheet which you can try out to discover your spending pattern. It’s a simple and safe way to start taking charge.

All you need do is to intentionally take the following steps, one at a time:

1. Collect and keep all weekly purchases bills/receipts by taking screenshots or photos of them on your phone. Compile these receipts into different folders on your computer: Week 1, Week 2, Week 3 and Week 4.
2. Change or add your expenses categories by updating the Expenses table in the SUMMARY sheet.
3. Record your expenses weekly in the TRANSACTION sheet and choose the expenses category from the drop down menu. The summary sheet is formatted to display the total sum of each expenses category.

Discovering spending patterns will help you to strategize realistically on your budget for expenses such as food, housing, automotive expenses, and etc.

With this proven strategy, you can enjoy what adult life has to offer and build wealth at the same time. When you keep track of your weekly and monthly spending patterns, you’ll have a bigger view in order to take control and start saving effectively.

Click here to download My Monthly Expenses Tracker.

Here are some ways you can take control of your expenses:

• Save on rent by considering a more affordable house/apartment/room or negotiate a better rental rate.

• Shop online for better choices and to easily compare prices between sites.

• Identify where you can save by making small changes to each category of your expenses. For example, instead of buying expensive coffee from cafes every now and then, buy your own coffee beans and brew your coffee at home instead. 

• Lessen your non-essential purchases and impulse purchases.

• Give yourself an allowance by making a conscious choice at the beginning of every week, month, or pay day about how much money you’ll allow yourself to spend on fun things. This is to protect you from the risk of setting yourself back financially by overspending