How budgeting and expense tracking has changed my life

We have crossed the first half of 2015 and I felt that it’s worth looking back at how my life has changed after starting this blog. I started tracking my expenses in October 2014, just a few months after starting my new job. Expense tracking was tedious but I got used to doing it. I found that having all that data to digest and pulling out interesting statistics about my life was fun.

The simple task of tracking my expenses changed everything

It was only after I started the journey of tracking my expenses, that I realised that my financial lifestyle was horrible despite earning a decent income each month. I was behind bills and incurring unnecessary interests on my credit cards. Once I got used to tracking my expenses, I started to see where all my money was going and worked on reducing unnecessary expenses.

Soon enough, my personal balance sheet became positive and I was no longer behind payments anymore. Next, I started setting up budgets to give me a clear view of how much I needed to spend on necessities and discretionary purchases. The life changing moment came in May when I was able to depend on my income in April to pay for expenses in May. I was no longer living from pay check to pay check.

Becoming more aware about how I spend my money

Here is a monthly expense chart (excluding mortgage repayments) to show how my financial lifestyle has changed after I started tracking my expenses, optimising them, and setting up budgets to manage my money.

I examined my expenses and made significant changes to them. Apart from small changes like packing work lunches and shopping online for better deals, I also made major changes like changing my insurance policies to enjoy the same coverage for lower premiums and refinancing my mortgage loan.

I managed to turn a lifestyle of frivolous spendings to a lifestyle of optimal spending without sacrificing quality of life. I’ve reached a plateau where my monthly expenses hover around $1,300 and I’m keeping it that way because anything lower will affects quality of life.

Saving more money for retirement

The biggest change to my life is savings. Like most Singaporeans, I used to have problems saving money for retirement. For the past 4 months, I have been able to sock away more than 75% of my income compared to the 38% that I was saving in January to build a retirement nest even though my income hasn’t changed in the last 6 months.

Ability to withstand unexpected expenses

With more savings in my bank account, I created multiple saving goals to hoard my savings. Each bucket represent a single monthly, yearly, or infrequent expense that needs to be budgeted for. I also have a few goals that cater to unexpected expenses such as family emergencies.

The family emergency saving goal came in very handy this month when my insurance agent informed me that my mother’s shield policy would require cash payment from this year onwards as my mother’s age (she is 71 this year) just crossed over to a new age band where the premiums required is more than the maximum Medisave withdrawal limit allowed by CPF. This unexpected expense was easily covered by my family emergency saving goal and did not make a dent on my budget this month.

Paying bills on time makes banks and other companies appreciate me as a customer

When I started making improvements to my finances in January, the first thing I wanted to focus on was to ensure that all my bills are budgeted for and paid on time. Fast forward to 6 months later, I’m finally reaping the benefits of being a customer who pay his bills on time.

Companies love me as a customer. SingTel released the deposit they held on my account when I was always late on bill payments and that’s $60 refunded to my account. OCBC sent me a $5 Coffee Bean & Tea Leaf gift card for paying my bills on time for 6 months in a row. Small perks, but I feel the love!

Some readers question how this is sustainable and why am I torturing myself. The matter of fact is that spending more money does not necessarily make me more happy. The question you should really ask yourself is, what really makes you happy? For me, it’s the luxury of being able to choose what I want to do and the joys of travelling. The long term prospect of early retirement excites me and the ability to travel without impacting my finances through saving goals keeps me happy while I work towards early retirement.