After a couple of years watching my finances not faring as great as I was expecting them to, I’ve finally decided to go beyond the usual “just stop doing X” internet advice and the basic analysis capacities the most common accounting platforms provided.
To do so, I did something called analytical accounting. For every transaction, I was splitting it into meaningful categories (Groceries:Staples, Groceries:Dairy, Groceries:House Cleaning, …) and assigning a tag for them, that was explaining why that expense took place. An example of such tag can be
proc_daily_burn – for most basic groceries or
proj_moving_houses – for a project moving between houses or
proc_relationship_X for drinks/dining out that I did to go out and see a friend. I’ve also recorded what I was paying for someone when I was inviting them out, but also when someone was inviting me to have a more global view of my expenses.
Here is what I’ve learned:
Don’t pay for dates/partners if they aren’t paying similarly.
Car is expensive AF, train – pretty much as well; carsharing is the best
Dining out creeps up really fast and alcohol – drank out or at home builds up to cost impressive amounts of money really fast.
Of all sports, skiing is most expensive, followed by swimming (mostly pool and trainer), whereas running by yourself is shockingly effective, despite the shoes price.
Car is fucking expensive, especially when renting is involved. trying to off-set it by car-sharing is pretty hard and often doesn’t work at all. That being said, per month, my rental expenses are comparable with the price of just owning a car in Switzerland – before repairs or gas.
I should stop going out with friends with whom I spend too much in one sitting and try to do more of the outings where I spend little for huge amounts of enjoyment. Which means friends who drink a lot and eat at expensive restaurants.
Similarly, the bang for buck of doing a party at home and cooking for it is significantly higher than the one of eating out.
Fanciness is about the last thing I need in my life at this stage. Dress watch, picking up bills for friends when going out, offering car rides/help for free when out with friends comes naturally, but if the favor is not regularly returned, it doesn’t make sense to keep going. Similarly, trying to collect wines – expensive or too many of them is expensive and brings little joy for the cost associated with it. In all hobbies, there is a point of diminishing returns, it makes no sense to go beyond it.
My godfathering is an excellent example of massive enjoyment/meaningfulness for a relatively limited price. Along with my relationship with my current GF and the visit to Paris with a friend of mine who loves running and was stopping on her way from SF.
The amount of catching up to do when you move in with basically nothing to a new country is massive. I am not yet done and it did cost me just shy of 3k.
Healthcare in Switzerland is expensive AF, but still a tiny amount compared to the US.
I am fortunate to have a housemate to split rent with and to count on if I mess up my accounting.
Debt snowballs fast. I ended by paying 3k total that was due to debt to banks. About 700 in interests, 800 in exchange rates and about 1k in service charges (paying with the wrong card, going over the limit, …), on top of the standard 380 that I was supposed to pay to the banks for keeping my accounts going. Basically 10x due to debt.
Now, when to looking where to save in a year:
- take the car as little as possible, going with carshare whenever possible, especially when going to my parent’s city.
- with less travel for leisure, there should be as well a bit less expenses
- when traveling, at least maximize for memorability for a given price.
- stopping going out with friends and GF so much, not eating and drinking as much as them and not picking up the bill will help tremendously.
- stop being fancy with wines and beers is another great way of saving.
- keep out of debt, above all else
What I learned about accounting:
- forcing yourself to write down expenses is hard in the long run; it gets easy as soon as you do less of the expenses you are unhappy about and start seeing it as a “where do I stand/how much can I afford to spend this month after I pay all the bills” kind of tool.
- tags are insanely powerful but require thinking about what to put in them and some planning forwards/re-tagging. In my case, it ended up being process/project – main motivation + location. Yet remembering the specific spelling of tags is far from evident. Splitting is uneasy and leads to cross-contamination as well, given it’s not always possible to put tags on the splits of the main expense.
- performing categories splitting as well as tags/owners is hard – you need to know in advance what kind of analysis you will want to do and keep it highly consistent.
- writing the meaningful messages as to “whom” you paid something is really helpful as well.
- what you have an impression you’ve spent on vs what you really did spend on have little to do one with another. You tend to forget small recurring expenses and instead focus on the big one-off ones, memorable because you gnashed your teeth while paying for them (just after a big resolution, a high fraction of your available money at that time), whereas a steady flow of smaller ones or intermediate ones tends to fly under the radar.
- just as with the weight gain, it’s hard to see what leads to accruing debt – where the previous poor decision ends and a more recent one starts
Just with the weight loss, it is easy to find yourself with an impression that you are having a lot of money at your disposal and start spending it only to realize it flies away way too fast and that you’ve wasted it all but forgot about an important recurring charge/planned charge.
Alcohol specifically: with regards to groceries, there were two major spikes – one for the wine fair, one for my trip to Avignon and Chateau-Neuf de Pape. For dining out, there is a noticeable spike with a childhood friend in January, that I was seeing for the first time in years, and another one while my ex was visiting from the US for a month. The consumption dropped drastically after September analysis of where my money was going and once I was no more in travels/visiting friends.
Project-wise, the ones that were the most imposing were my ex’s visit (4.5k), followed by the Interrail trip across central Europe(2.5k) – which is insane considering the difference in duration, location, and excitement between the two; followed by furnishing a new apartment (1.9k), with Christmas coming on the tail (1.4k), a trip to Portugal with the lab (1k), smartwatch (1k), Paris with the US friend (360), skiing equipment, watches, pure move to Bassenges (700), fine wines (650), Skiing with Fred (650), move with my friend into his appt right after coming back from the US (580), Avignon to see a high school friend, (566), Audio equipment (561), skiing with dad (469), with Madrid with my GF being surprisingly cheap (350), about the level of Strasbourg visit with an average at 312, on par with the WEs with Nat in Strasbourg (cherry+October) and slightly below WEs in Switzerland (~200) with thermometers clocking in around 500 (BBQ is an expensive hobby after all…).
Relativism is toxic – some expenses are high, but it doesn’t mean you should consider burning off a fraction of them on small things that are no biggie.
To fight it, defining a base amount (as for instance my favorite Nepalese in Baltimore) and every time you make an expense, ask yourself if you are going to get more pleasure from that expense than from the base amount. Whether the expected trade-off is worth it. You’ll develop a keen sense of what is worth what to you.
Adjusting the sense of what is an acceptable expense – aka overcoming the legacy of brokenness and a sharp lack of money. You need to get physically uncomfortable with not having more room/not having more savings to avoid compensating for things you didn’t buy for yourself as well as the frustration of the lack of money from all those years.
But perhaps, most importantly, the devil is in the details. your memory is imperfect and does not register daily groceries, you buy almost every day for 5-10 euros as anything significant and yet it adds up to 300 – a plane ticket you would have definitely remembered.