Every Time I Spend Money, I Text Myself
Until about two years ago, I had zero clue how much money I spent every month. I took a job as an Associate Teacher my first year out of college and was extremely fortunate to graduate without student loans to pay back. While modest according to NYC standards, my salary was more than enough for me to live off of (I also had six roommates at the time and my rent was very low). I mostly spent money on rent, food, and transportation. I wasn’t intentionally saving money, but I also wasn’t spending my entire paycheck each month (so I was “accidentally saving” each month). I also wasn’t independently investing in the stock market at the time (though I did have a retirement account, which I knew next to nothing about).
Although I wasn’t spending recklessly, I had a lot of mental blocks around money. I mostly just felt like it wasn’t for me to understand and I had no real interest in knowing what I spent a month. I also felt some shame — I knew there were some things that I bought or spent money on that I didn’t want to be confronted with (nothing crazy; mostly material things that I just knew I really didn’t need). I would pay off my credit card balance almost every other day because it prevented me from actually knowing what a month’s worth of spending looked like for me. My general philosophy was as long as I keep making money and there’s some saved up in my bank account and I pay off my credit card and don’t go into debt or ruin my credit score, it’s all good.
I was wrong.
Well, sort of.
Again, I wasn’t doing anything reckless — like I said, I always paid my credit card bill and I had enough money to afford my lifestyle. But I wasn’t thinking long-term and I wasn’t looking at the full picture. Did I want to live in a tiny bedroom with six roommates forever? Was this philosophy on money going to suffice in trying to support the kid(s) I might want to have one day? Could I get by having no clue what my spending habits were or where my money was going? Maybe, but probably not sustainably.
When I moved out of my tiny bedroom three years ago and moved in with my partner, my rent cost went up significantly because we were living in a much nicer building and I wasn’t sharing the space with a million (well, six) people. It was worth it, but my cost of living suddenly spiked up. At that point, I really couldn’t continue to keep my head buried in the sand around the reality of my monthly spending.
At the time, my partner, who has been a huge support in my journey towards financial literacy, showed me the spreadsheets he uses to keep track of his finances. I adapted them slightly and have been using an excel spreadsheet ever since. Today, while I ultimately want to be able to invest even more than I currently am, I’m in a good spot with my budgeting, I know exactly what I spend, give or take, according to different categories each month and I have a loose sense of the way my money will grow and continue to support me over time.
While facing our spending can feel bad, it can also serve as a real wake up call: where is your money flowing? Does it make sense that you spend 50% of your salary on rent? Does it make sense to spend 30% of your salary on “going out” costs? (It might —the goal here is not shame, but awareness and intentionality). Not knowing how we spend money is not sustainable (for most of us, anyway). There are so many apps that can help with budgeting (some reader favorites are Mint, YNAB, Pocket Guard, Prism, and Personal Capital). While I recognize these apps make all of this way more simple (and I actually also use Personal Capital’s free software in addition to what I describe below), I do all of my budgeting manually (for now). Here’s my system:
Every time I spend money (every.time.), I send myself a text message with what I bought and the cost (see above photo). About once a week, I sit down and I update my excel spreadsheet for that month using my text conversations with myself as a guide. In my spreadsheet, I have categories that match my lifestyle: “rent” (including utilities), “transportation”, “food”, “fun”, and “salary from me” (investments into my individual taxable investment account through Betterment). I input everything I’ve texted myself from the week into these categories, and, using Excel’s algorithms to do the math for me, I find out how much money I’ve spent so far that month, and in which categories. At the end of the spreadsheet, I list my total projected income for the month (it’s usually the same since I work in a steady job, but there are some months where I take on side projects or make a little bit of extra income) and subtract what I’ve spent so far. At any given point in the month, I have an idea of how much money I have left before I start to dip into my savings (and since beginning to use this system a year and a half ago, I’ve only had to do that once).
“You text yourself every time you spend money? That’s weird and a waste of time,” You might be thinking. Yes, I’d argue that eventually, I should probably modify this process and either rely on my bank statements or budgeting apps to get the info I need about where my money is going. But what I love about this system is that it holds me super accountable — there is no way to hide from anything I buy or to pretend I don’t know what’s going on with my money. In this way, I’ve found that I’m more thoughtful about what I spend money on because I’m going to have to report/disclose it to myself via text message. Eventually, I won’t need to do this anymore, but while I’m in a phase of growth and learning, I’ve found that being confronted with my spending every single time I spend money forces me to be more intentional, thoughtful, and aware of where my money goes.
Disclaimer* I am NOT a financial advisor, I have no formal training in this space, and I am not authorized to give advice on how to manage your finances. I am literally a woman who realized she didn’t have her financial sh*t together, who felt systemically kept in the dark about money, and who is trying to learn as best she can how to get out of the dark.
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