Have you ever wondered where’s your money gone? It’s like by mid of the month you feel like robbed by an “invisible hand?”
This, my story around 3 years back.
At that time, I always thought that my top 3 monthly expenses are monthly groceries, mortgage installment (“KPR” in Indonesian term), and car related (gas, toll road, maintenance). By then, I was set already to cut the groceries spending in order to create some room for more saving.
To confirm the decision, I started to track my ACTUAL expenses… and ended up with a quite surprising outcome. See the below pareto diagram*.
just a disclaimer, the number on the diagram is for illustration purpose (the proportion is real, though)
The advantage of pareto diagram is it makes the issues more visual and eye catching. Unlike my initial thought, actually my top 3 spending was Hang out/dining out, Clothing & accessories & mortgage installment.
The top 2 were basically big & latent problem; spending on mortgage is always a wise one. Hang out/dining out was overlooked (familiar?). It’s felt not really hurt (no?), it seems the daily habit having a big, nice & long lunch plus more than two(!) coffee/tea breaks a day plus a closing with a nice dinner with my buddies just a trivial spending*
Having a better financial situation right now, I wonder if any you have the same overlook of big spending which feel like nothing at all?
* Here how I made the pareto diagram
1. Track the ACTUAL spending (actual = no assumption)
I collected all receipts or credit card/transaction slips. If no slip, I write the amount on a piece of paper or a sticky notes.
2. Group them into several clusters: monthly groceries, card related, dining/hang out, etc.
3. Punch the data into spreadsheet and put on a pareto diagram.
** To be fair for that moment, I did have a great time in office plus some additional fat too (hahaha). The key is actually not to eliminate it but to reduce and control it.