Greetings, weird people of the internet. It is I, your favourite blogger who has not posted anything for over 3 years. In this blog, I will show you how you can manage your own expenses like the cool kids do.
One of the things that I have noticed during my almost 30 years on this planet is that a lot of people are always in debt, no matter how rich or poor they are. In case you don't know this already, being in debt sucks. I'm going to teach you how to NOT do that.
Before we get started, let me introduce myself, as you may be dying to know who I am. My name is Savidu, and I've been an adult for almost 12 years. I've been budgeting and managing my expenses ever since I started working 6 years ago. Up until the end of 2021, I lived with my family while I was working as a Software Engineer. Life was nice since I made good money and didn't have to pay for food or rent. But everything changed w̶h̶e̶n̶ ̶t̶h̶e̶ ̶F̶i̶r̶e̶ ̶N̶a̶t̶i̶o̶n̶ ̶a̶t̶t̶a̶c̶k̶e̶d̶ I moved to Finland 3 years ago. All of a sudden, I found myself with a very limited amount of money (until I got a job) and no support system. It was more important that ever that I maintain a good system to keep track of where my money is going, so that I can plan ahead. Thus, I developed my own expense tracking system, and have been improving it over time for 3 years. So, if you're wondering why you should listen to me, I highly suggest that you read this paragraph again.
So now that you know that I'm a big expert and basically a qualified Accountant at this point, you may be wondering what makes YOU qualified to manage your own expenses… Let me ask you this;
Do you have more than 2 brain cells?
Do you not have rich parents you will buy you anything you want?
Do you know what Excel or Google Sheets is?
If your answer to all of the questions above is “yes”, then this blog is for you.
Why you should keep track of your expenses
If you're still thinking that you don't need to keep track of your expenses, good for you! I hope you have a great day in kindergarten. For the rest of you who are on the fence; let me tell you why I think you should do it.
First of all, it's generally a good idea to know where your money is going. Have you ever wondered why your bank balance is lower than you thought it was, and decide to check if the bank had made a mistake, but it turned out that it didn't and the actual mistake was you? This wouldn't have happened if you kept track if your spending.
When you keep track of your spending, you could also categorize it in such a way that you can clearly see where everything is going. So, whenever you notice that your spending is high, you can see exactly what you've been spending money on. You might say something like “I don't need to write down my expenses, I can remember what I spent my money on. I'm better than everyone hurr durr…”. To that, I say; no you don't remember what you spent. You're a worthless waste of oxygen just like everyone else. Also, how's kindergarten? Did mommy remember to pack your lunch?
Let's say that you have an emergency because sometimes life gives you lemons. Imagine that your dumb cat gets itself wedged inside a billionaire's mansion's ventilation shaft while chasing a pigeon. Three fire trucks, one structural engineer, a specialized animal rescue team, and an emergency duct demolition later, your cat is freed. The billionaire and the city sues you for €12,000 in damages, and the pigeon is laughing at you. You take a 2 year interest free loan from a very generous bank, and end up having to pay €500 each month. Where ever are you going to find that money from?
You take a look at your expenses, and see that on average, you spend €400 a month on eating out and food deliveries. €120/month on a kitty litter subscription. €50/month on your subscriptions to streaming services. €800/month on rent. €500/month on socks. €150/month on petrol. €200/month on clothes, electronics, and other personal items. When you see what your expenses look like on average, it's easier to make a budget. For example, first of all, stop spending so much money on socks you weirdo! But if you really really REALLY need your socks, maybe you could cut down on eating out by half, and learn how to make a sandwitch. Your kitty has been bad, no kitty litter for Professor Fluffington. He can poop outside. Cut down on your subscriptions. Maybe you should be watching your cat instead of Netflix. Maybe don't cut down on rent. You and your cat need a roof over your dumb heads. Take the bus once in a while. Buy less nice things for yourself. You don't deserve it. You get the idea. Before you know it, you end up saving €600/month.
At the end of the day, the main reason I do this is because you become your own financial advisor. When I write down what I have spent on, it really drills into my head. The expense tracker becomes my boss. If you have not tried it, you do not understand the power of writing things down. Maybe I'll do a blog about it one day. Every time before I buy something, I remember that I'll have to write this down. That makes me think twice about reaching into my wallet.
How I do it
Alright, enough chit chat. Let me show you how I manage my expenses. There's no special app for this. Remember what I said about the power of writing things down? No? Are you skimming through my blog instead of actually reading it? Maybe it would be better if you watch this video instead. Anyway, back to what I was talking about. You don't need anything fancy. Just a pen and paper. Just kidding! All you need is a simple spreadsheet. You could use Google Sheets or Excel. I prefer to use Google Sheets because it's easier to edit it on my phone. Also, it's simple and easier to work with.
Also, it's important that you should know I have been keeping this up consistently for over 3 years. So what you see is an iterative improvement through many steps of trial and error.
Without further ado, here is the Google Sheet template that I use to manage my expenses.
The great Google Sheet
Before I continue, I want to highlight that this spreadsheet controls my life. Like I said before, this is basically my own digital financial advisor that makes me question my every spending decision.
Now that I have shared the sheet with you, let me take you through everything in it.
If you take a look at the very bottom of the spreadsheet, you can find the different tabs that I use to manage my expenses. Let me give you a quick summary of what each one is before diving deeper.
Expense Types: note of the different categories you split your expenses into.
Template single: template on how you can write down your expenses if you are managing expenses on your own
Template w partner: template on how you can write down your expenses if you are splitting expenses with your partner.
January: this is just an example. The idea is that you should create a copy of the template for each month of the year.
Long-term: expenses that span over a few months (e.g. taxes, insurance, annual subscriptions)
Summary: summary of your annual expenses
Expense Types
The purpose of this sheet is to help you categorize your expenses into different types. What you see here are the different types of expenses that I use.
The first column is very colourful. Each item has a number and a corresponding colour. The number is there so that you can use complex formulas that automatically summarizes your expenses by splitting them into different categories. The colours are there for you, so that it's easier for your eyes to understand what kind of expense something is.
The second column is the title of the expense category. These are the different types of categories that I have come across based on my spending. You can adjust these to match your lifestyle.
The rest of the columns are just examples that I have written down to help me remember how I should categorize my expenses when I write them down. This is so that all my expenses remain consistent. For example, if I go out to watch a movie, do I put the cost of the movie ticket under “Outings” or “Recreation”? How you categorize it might depend on the kind of person you are. I would consider it to be a recreational activity, but on some days I might think of it as an outing. I have put this down as an example so that I could avoid any confusion in the future and all my movie ticket related expenses are always consistent.
It's important to note that you are your own boss! You can define these categories according to your own lifestyle. There are no rules set in stone. The tax man is not going to come after you if consider a cloth hanger to be “Clothing” instead of “Home equipment”. What's important is that you define your own categories and stick to it.
Templates and monthly expenses
The idea of the template tabs is that it acts as a blueprint for which you can put down your expenses. You should create a copy of the templates tab for each month and write down the expenses. Let me take you through the different sections in this sheet.
Personal expenses
What you see here is an example of my personal expenses from July of last year. I've hidden the actual numbers so that Elon Musk won't get jealous when he reads this.
You should use this section to write down expenses that you have spent for yourself. This section is pretty self descriptive, but to give you a quick run down, the first column shows the date the expenses were made. Then you have the type of expense that we talked about previously. Then you write down what the actual expense was in your description. The last two columns are some basic accounting stuff, where you write down how much you made or spent on the transaction.
Partner split expenses
You can find this category in the “Template w partner” tab. Here is an example from me for the same month.
The idea of this section is to enter the expenses that you share with someone. You can ignore this if it doesn't apply to you (HAH LOSER!). This section is used to help you summarize your monthly expenses in such a way that the cost of the shared expenses get split, and you can accurately see how much you have spent on your own.
If you and your partner (or partners… I don't judge.. actually I do judge a little bit) don't split expenses, or if you want to keep track of your combined expenses, you can skip this section.
Monthly Budgets
If you want, you can set yourself budgets for different kinds of expenses that you have. If you scroll down from the “personal expenses” section, you can see an example of a budget that I have set called “Regular expenses”.
This is an example of a budget that I have set myself on how much I should spend on groceries and eating out for this month (February).
Regular expenses: total spending on groceries and meals
Monthly regular expense allocation: how much I have allocated myself to spend on this month (€)
No. of days: number of days of the month (most Februaries… Februarys.. whatever have 28 days).
Regular expenses per day: how much could be spent per day
Current expense allocation: how much I could have spent up to today (DAY(TODAY()) * 8.93)
Remaining allocation: how much money is left from the current allocation (107.14 - 77.64). This could be negative if I have overspent my current allocation.
Allocated expense percentage: how much of my current allocation has been used. This could be over 100% if I have overspent my current allocation.
Broad expenses
Broad expenses are those that consist of multiple sub-expenses. For example, if you go on a trip, you would be spending on plane tickets, hotels, food, etc. The idea here is that you could categorize such expenses under a single “Trips” expense, but still be able to see all the individual expenses related to that trip. This could be seen on the “Trip” section of the template.
Here is an example of the expenses on a trip to the Dolomites that I went on July of last year. This is a trip that I went on with a group of people, which is why you could see certain entries for “settlements” where I have put down as income. This could be cases like me paying for the hotel, and everyone paying back their share of the amount. But the idea here is that I could see the expenses for this particular trip in a more granular level.
Monthly summary
The monthly summary section lets to take a look at your expenses at a broader level for the given month
This is where the magic happens. You write down all of your expenses for each month, but what's the point of categorizing them into different expense type if you're not going to use them? This is where you get to impress all the ladies with your spreadsheet formulas.
What you see here are the categories that I have decided to summarize because they are what is important to me. But you can create your own categories, and make them as simple or complicated as you want. For example, let's take a look at how I summarize my spending on groceries.
The formula I use to get my total spending on groceries is like this.
=SUMIFS(E2:E44,B2:B44, 4)Let's break this down. What we do here is we get the SUM of all values in column E from row 2 - 44 (E2:E44), where the type value in column B from row 2 - 44 (B2:B44) is 4. If you take a look at our expense types, we can see that type 4 refers to expenses related to Grocery shopping.
If you are splitting expenses with your partner, the formula becomes a bit more complex like this:
=(SUMIFS(E2:E44,B2:B44, 4) + (SUMIFS(AA3:AA43,X3:X43, 4)/2))This is broken down into the sum of 2 parts. The first part SUMIFS(E2:E44,B2:B44, 4) is exactly the same as what we talked about. SUMIFS(AA3:AA43,X3:X43, 4)/2 is taken from the “Partner split expenses” section, where we take the SUM of all values from AA3:AA43, where the type from X3:X43 is 4. But this time, the total value is divided by 2. The reason for this is that my wife and I split our shared expenses equally. If you and your partner split your expenses differently, you could adjust the formula accordingly. For example, if you have a 60/40 split, where you are paying the 60%, the formula can be adjusted to be SUMIFS(AA3:AA43,X3:X43, 4)*0.6 .
Oh but it doesn't end there. You can make even more complex formulas by combining different expense types into a single category. For example, I consider all expenses related to Home equipment (type 6), clothing (type 10), and personal items (type 11) to fall under “Personal Items". If you take a look at the formula in the template, it look like this.
=SUM(ARRAYFORMULA(SUMIF(B2:B44, {"6", "10", "11"}, E2:E44)))This is a bit different from the previous one. Instead of using SUMIFS, we now use ARRAYFORMULA to get the sums of all values in E2:E44, where the expense types are 6, 10, and 11, and then add them together using the SUM operator. You get to apply a similar logic when splitting the expenses with your partner.
Phew! That's it! Those are all of the sections in the monthly expense template. But we're not done yet. We have 2 more tabs to go in the spreadsheet document. Let's head on to Long-term expenses
Long-term expenses
Long-term expenses refer to expenses (or income) that span over more than one month. One personal example that I could give is my car insurance. My car insurance is paid in 2 installments each year (on 01.03.2024, and 01.09.2024). Although I could add the expenses to the months of March and September, the summaries for these months would have unusual spikes in car related expenses. This could be a bit misleading, since although you make the payment once, it is for a duration of 6 months. Therefore, you're better off recording them separately as a long-term expense.
Summary
This is the last one, I promise! The propose of this tab is for you to be able to take a look at your individual monthly expense summaries in a single page, without having to switch over multiple tabs. This way, it becomes easier to compare expenses between different months, and identify your patterns. Finally, you could put everything together and see how much you have spent in total, as well as how much was spent on average. You can use this information to make budgets for yourself and plan your upcoming years financially.
That's it! Thank you for coming to my Ted talk. You may make yourself useful now.
Making a habit of it
I'm going to be honest with you. Having to enter all of your expenses manually is a huge pain in the bum bum… the booty, caboose, the old lumpy-dumpy poop factory. But that is the worst part about this whole thing. I wouldn't be spending so much time and effort writing this if it wasn't worth the effort. Would I waste your time? Actually, yeah I would, but still.
You may be wondering how I managed to keep doing this consistently for 6 years. The answer is you need a little bit of luck, skill, some of concentrated power of will, a little pleasure, a lot of pain, and a 100% reason to remember the name. What was I talking about? Oh yeah… how I would never waste your time. The reason I could keep this up for such a long time is that I learned how to make habit of it, and got to see how useful it is to me.
One thing to keep note of is that this method of expense tracking is not very cash friendly, as is pretty much any other method. Living in Finland really helps because it's a cashless society, and almost every payment is done through cards or through (Apple/Google pay). When you make payments with your card, you would most likely get a notification such as a message, Apple/Google pay, or from the bank itself. What I do is, I keep these notifications on my phone throughout the day so that I don't forget about it.
When I go home and get ready to go to bed, I just enter the expenses for the day into the sheet, and sleep like a baby. This is why I like using Google Sheets, because it's easier to work with on the phone. The template sheet is pretty big (23 columns), so entering the information from your phone is still not fun. Here's a tip on how you can do it from your phone; just enter the date, description, and the amount into the sheet, and clear off the notification. When you have access to a bigger screen later, you can copy-paste the expense types.
What's wrong with this system
I know that I've been giving some big talk about this system. But now I'm going to tell you why I hate it. One of the most annoying things about this spreadsheet is the amount of women who constantly run after me whenever they see this spreadsheet. My next biggest peeve is how boring and manual everything is. An ideal solution to this would be to develop some kind of app that automatically reads your notifications, and puts them into the sheet, which is exactly what I'm working on. I'll probably write a blog about that when I get to it. But until then, everything about having to remember and enter expenses into a big fat spreadsheet sucks.
The next disadvantage of this is like I said before is; it's hard to keep track of your expenses paid in cash. You could of course collect receipts and keep them with you, but that's not ideal, and you have to carry physical papers around with you. You could of course put down each expense as you make it, like a psychopath.
But that's really it. There's nothing else that I hate about this. Overall, the outcome that you get is well worth all the pain and suffering.
Final thoughts
Alright, this is the last paragraph that I get to convince you to try managing your expenses. So here we go. Don't be such a baby! Remember that this is something you are doing for yourself. You're not doing this to impress people and show them how cool you are (although that is kind of what I'm doing right now with this blog). You are doing this to make your life better. You are a grown-up after all. On the same note, remember that you are your own boss. There aren't going to be any auditors or tax collectors breathing down your neck. There's no right or wrong way to do this. When you start your journey into financial management, you will make mistakes, and that's okay. What's important is that you learn from them and make improvements as you go on. That's it. Ok byeeeeee.
Thank you master evil Savi