This is the one in a series of (at least) 30 posts I’m going to write this month as part of what Wesley Zhao and I have dubbed No-Blog-Sloth November Challenge. One post will appear here a day from now until the end of November.
A big problem I’ve had ever since high school is spending money. Sophomore year of high school I started a company selling BlackBerry and iPhone apps. This was right at the beginning of the app craze and I made several thousand dollars doing it. By senior year all of that money was gone, and I couldn’t really point to any large purchases that had sucked it away. I had literally spent it all on gas, food, and other consumables for which I have nothing to show.
Working that hard and having it all go down the drain on things which don’t really drastically improve your quality of life is a really bad feeling.
When I got to college I had the same issue. It was so easy to go to Wawa and blow $10 on a sandwhich and a drink that I was constantly running out of money on my debit card. So I finally decided I had to do something about it.
After reading Titan: The Life of John D. Rockefeller by Ron Chernow I decided to track my expenses. Chernow says that throughout his life Rockefeller kept meticulous records of his finances, and not only did that help him save money through the years, it also gave him a good sense of where his money was going. This helped him make better business decisions, because it allowed him to see clearly where his money was going in his business.
How does tracking your expenses lead to spending less? Well, as Sebastian Marshall always says, “what gets measured, gets improved.” Or something like that. But I really do see a difference.
I’ve struggled with consistency over the time that I’ve been doing it, but in general I carry around a small black notebook in my back pocket every day. Right after I buy anything, I take a second and jot down the price and the item. I also keep a running total of the amount spent for the day. This has the added benefit of improving my mental addition skills.
Looking back I can tell you that on August 22nd I spent $9.29 all on food. On October 4th I spent $8.69 at Chipotle. On November 2nd I spent $12.75 on coffee, food and ATM fees.
Doing this every day has been a really eye opening experience into showing me where my money is going, and where I can get the best value for what I’m buying. For example I know that I will never again go to a Penn dining hall and buy sushi. A few days ago I bought sushi and a drink for lunch it totaled to $9.98. If I went to a great food cart near the gym I could have gotten the same amount of higher quality food for $3.50.
Compounded over months or years, small decisions like that end up addding to a lot of money. And building up even a small amount of savings allows you to make decisions that you otherwise probably couldn’t which can in turn bring a lot of value to your life. So my theory is that if I can make a decision that will cost less, but won’t significantly affect my present quality of life I will make that decision.