I just finished tidying up my month end accounts. I've been doing this for quite a while, so it didn't take too much time as all the necessary process had already become a routine and it's just a matter of clicking the right websites and recording down some numbers. Let me share what I do every month end:
1. Open up my excel spreadsheet. There are 2 books that needed me to fill up. First is the monthly expenditure. In the past I used to record all my expenses, big or small, onto that spreadsheet daily. But these days, I tend to consolidate over a few days to a week before putting them into the spreadsheet. I realised that I don't need such precision and accuracy now, because I already know what my spending pattern is. I take that as a reason to reduce the amount of work to do some tracking (it's not much work even if I do it on a daily basis, but a few minutes shaved off is still a bonus haha!)
After filling that up, I'll do up my second book - networth. This means going to the respective websites, log in, and record the following:
Group A: Amount at month end of all my personal and joint bank accounts, as well as spare cash in the drawer
Group B: Amount in the money market fund
Group C: Amount of money in stock portfolio, based on latest market price
Group D: Net surrender value of whole life policies
Group E: Amount of CPF in various accounts
I do not take into account the market price of my HDB flat, but neither did I take into account the existing liabilities in terms of the mortgage loans. I will treat my networth accounting as such for similar asset that I had borrowed money to get it.
2. I'll also take the opportunity to pay up all my credit card bills in full. I usually use my POSB everyday card for day to day purchases. However, for big items, I'll use Manhattan card to do that. I used to pay using SCBs debit card for the rebate, but thought that I should conserve more cash since I'm a bit tight in liquidity the last few months.
3. Lastly, I'll transfer a portion of the cash in my bank account over to a separate account. This will form the savings that I will need to do every month. I think the amount doesn't matter (but it does matter if you want to hit a particular savings target per year), it's the act of putting aside a portion of your income that is important. I always think that if you do not save a portion, even a small amount, when you have this salary that you are drawing currently, what makes you think you can save when your salary increased in the future? Thus the habit that is inculcated is more important that the amount saved, at least at the beginning.
What's the point of tracking all these, you ask? I think the greatest pros of doing this exercise is to give confidence to your own financial status at any point in time. You will know what you have at a glance by looking through your books. This will allow you to make proper and realistic financial decisions when the time calls for it. At the same time, you will also be able to track your progress over time and see if you had been doing the right things financially. Too much debt? Too much spending on luxury items? Too little income? All these will be shown in the books that you keep, much like the quarterly financial statements that public companies publish for their listing requirements.
It's good to see yourself as a company, especially in matters dealing with finance.
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