Over the past few years, I've been taking more and more steps to spending less money, though I realise now I can do a lot more. It all started when I bought the house, I guess my spending naturally declined on certain things. Having to pay my mortgage, rates and all the other expenses that go along with that made me think about what I'd been spending my money on.
Whilst I stopped spending on some things, I didn't actually take a step back and take stock of my entire spending habit. As I said earlier, buying the house made me think a lot more even though I didn't action it as much as I could. My plan back then was to pay the house off by the time I was 40 which I now see as step 1 on the road to financial independence.
My ideas have changed somewhat recently in that I've decided that I actually want to both pay the house off by the time I'm 40 and not have to work either. I've recently made this harder on myself by going down to a four day work week instead of the usual five (a story for another time). The funny thing is, it is this decision that has finally made me start to really do something about my spending. Don't get me wrong, my spending isn't out of control ... I am currently debt-free (apart from the obvious mortgage) ... but I'd just like to spend less.
The more I read various Personal Finance blogs, it seems more likely that you can become financially independent by literally spending less. Let's put it this way, it is many times more likely to happen that way than it is to invent a new product, win the lottery or create a massively successful business. And therefore, the most important thing to spending less is to create a budget.
Currently however, I'm not in the position to create a budget since you can't make one if you don't know what your expenses are. Recently I started to use GnuCash to track my expenses. I had spoken to a few people about this and have even played with it in the past. As Stephen says "Gnucash is a very sophisticated double-entry accounting package" which is perfect for this exact cause. The best thing about GnuCash though is that it's free and there's nothing better than free. Not only do I track all my accounts but I also track my cash expenses too however small they are. (Luckily in NZ I rarely have to carry cash.)
That's the expenses sorted so what about the budget? Well, I'm going to give myself about three months before I actually make myself a budget so that I have something to compare it to. I'll then be able to figure out which expenses should be decreased or even cut. By then I'll have at least a little history to make and back up my decisions.
I'd just like to note that already something weird has started to happen. Even though I don't have that budget yet I've already noticed my spending has gone down. I think the act of carefully recording every expense has meant two things: (1) that I think more about it and whether I actually need it, and (2) the more I spend, the more admin I have to do inside GnuCash each evening. I know you can automate some things but the act of balancing the books is quite a relaxing and happy one. Thanks to Donovan for suggesting that one to me.
Note: in my first few posts I'm going to be giving background on why I'm doing all this. In future posts I shall be giving information on how I'm doing it. I'm sure my tactics will change over the years after learning more things about PF and about how other people do it but that's no different to all areas of life.
To help me along (and other reading this blog), tell me in the comments some good PF blogs that you read and that we can all learn from.