Personal finance: from simple to complex

    Back in 2007, I purchased a program for maintaining personal finances and still keep records of home accounting in it. In this post I will talk about what experience I gained and what I endured for myself. There will not be any reviews of financial management programs under the cut - I have not watched them for several years (and I can’t advertise my program either, because in many respects it doesn’t suit me for a long time, but the accumulated data archive makes changing the software difficult). Also, although I read Kiyosaki in my time, I am very critical and skeptical of what I read, although many things were able to be tried on my own skin. There will not be a series of articles, I will try to keep within one.

    So, a long, long time ago, in a distant, distant galaxy, I decided to take into account personal finance. It seemed to me a very interesting thing, there were a lot of plans - and I plunged headlong into the subject area.

    Programs for PC

    I reviewed a lot of programs (install programs, and then demolish and install new ones - no one will know this?) And the selection process was very long and painful. I reviewed both online programs that required the Internet and stored everything on a shared server (the term “cloud” did not exist then) and small programs and heavy monsters, and somehow I didn’t like it.

    I didn’t like the online programs because someone else’s uncle got access to my personal information, smartphones weren’t so massive then that I didn’t even think that after five to seven years the availability of an Android version would be very desirable for me, some programs were frankly raw, pulling a long tail of dependencies (say, in the form of various kinds of sql servers). I really liked cross-platform programs, but they had their own problems: someone suffered from an interface, some were abandoned by the author, and some of them didn’t work for me.

    I went especially far away with programs that had such a sophisticated accounting methodology that the entry threshold was incredibly large.

    One of the options that I was considering (and he was on the final shortlist of applicants) was a regular spreadsheet. I encountered a lot at the banking forum, where I managed to settle by that time, mentioning that this is a convenient and working way. Moreover, he works for people whom I knew almost personally and these people were very authoritative for me.

    In general, what do I want to tell about the programs? All this can be fit into the following tips:
    1. Do not delay with the choice of software - there is a risk of burn out or change the program for even better each month. I’m a bit geeky myself - therefore, I know that it is sometimes difficult to get out of this process. And then the fuse just disappears.
    2. Choose a fairly simple program. Most of the functionality is unlikely to be in demand by you, especially (oddly enough) in terms of reports.
    3. The program is not so important (you can keep a simple account even in Excel), more important will be different (more about this below)

    About the routine

    There is nothing more boring than day-to-day methodically and regularly meticulously recording your expenses. This is the thing on which the majority of dreamers like me break down, who have fired up an idea, and when faced with a boring routine, they jumped off after two months. I advised a lot of people who planned to take into account home finances - and of the few who did not just chat, but set up a program and started accounting, I know very few people who managed to hold out for at least three months and who crossed the threshold six months I generally remember by name.

    I read similar observations from many who keep accounts, write accounting software, write articles and reviews - therefore I think that the issue of perseverance and methodicality is the cornerstone in the conduct of home accounting. Do you take into account personal / home finances a year? This is a very good result, to which few people have reached, but we will see if you can manage to overcome the line at least three years, especially not five years.

    Personally, I am generally very surprised how with my addicted (and just as quickly burning out) character, I managed not to quit either at the initial stages, or after a year, or after two. However, when I see a challenge, it motivates me a lot: I studied Solo on the keyboard like that, everything was not going smoothly there either, but the difficulties gave me strength. And even more so, I don’t know how it will turn out for you personally if you decide to repeat my path, how well you know yourself, how motivated you are to run long distances. Ideally, after all, accounting for finances is like a healthy lifestyle: once you start - and do not slow down until the end of your life.

    What can help to cope with the routine? (I want to answer this question separately, because this is one of the most important questions related to accounting for home finances)

    Firstly, it helps to cope greatly that after a month or two, depositing money begins to take five minutes a day. Well, not two months, well six months - it’s really hard for me to remember, since it was a very long time ago. At first it’s very difficult to remember WHERE and WHERE you spent the money on, you constantly have to write off expenses for “other” and “unrecognized”, this breaking is the second of the most difficult pitfalls in accounting. You start writing down on notes, making it almost immediately into the program - it looks very funny from the outside, but believe me: the one who spends and contributes is not very funny. But if you overcome a certain barrier, then in a year's time you can come to a state where the expenses are paid once at the end of the day, the expenses are recalled to the account “once”, five to ten minutes are spent on entering the data - and most important:

    Secondly, sometimes I allow myself to relax and not enter data into the program for five days, or even a whole week. Oddly enough - you still remember almost everything (most of the expenses are regular, periodic), and if it doesn’t converge somewhere, you can always write off the “unrecognized” column. If your “undoubted” is up to 1-2% of the total expenses - and even a jester with it (I will talk about it below). If you can’t remember the cost of half the salary ... yes, this is probably too much.

    Thirdly, plastic cards are very convenient. If you get used to minimizing the cost of the cache, then entering the data for the whole week based on an extract from banking will be very simple. Suppose I had a period in my life when I only spent cash on a minibus in the morning - and this figure was constant from day to day, I paid the rest from the card. Believe - keeping records helped a lot.

    And of course, the most important thing - without motivation (especially long-term) in this regard is nowhere.


    I won’t talk about motivation for a long time, the topic is too slippery and how many articles on this topic I saw on the Habré - there are very few sensible ones, but I’d better tell you later separately if necessary.
    But motivation is just that thing that moves mountains and erases them into fine dust.

    There is motivation - accounting for finances will become a habit and over time will develop into financial literacy and a financial culture, which will later be passed on to your children. No motivation - give up after a couple of months at best.

    How to find motivation - there are no universal recipes, you need to know yourself well and sharpen yourself, and not use other people's schemes thoughtlessly. I'll tell you a little about how others can kill motivation.
    Perhaps the most difficult moment is when your personal finances become your family finances and you begin to take into account not your personal expenses - but family expenses. If you have reached a level where it is easy to remember where and how much you spent, then it is not a fact that your half will remember well what her daily expenses were. Yes, your assiduity will simply not be enough, and it will abandon you to pay your expenses, or shift this obligation on you (“here you go”), while forgetting what and where it is being spent.

    The second point is that the return on financial management is not immediately visible, at short distances, it manifests itself in fairly long segments. Then you will look back and see how the long way has gone a long way - and at first you will want to spit and quit a hundred times, because there is no exhaust, your goals are not achieved (and if you start with various “plans for financial independence” - this is generally a trumpet. such plans are set for a further period to observe them over short distances is difficult - and constantly think about it, and what for it generally takes.

    Level one's

    What a person who takes into account his finances gets. The whole first year, as a rule, it takes to be able to realize WHERE AND HOW MUCH MONEY IS SPEND. Can you tell me how much your salary is? Surely you can. How much did you spend on food? On clothes?

    The most realistic goal for the first year is just to understand where and how much you spend. Just write down your expenses - and as you do this operation, you will understand how many things you know are very inaccurate, how many things are forgotten on the machine, how accurately you are reporting how much you spend on entertainment (usually these expense graphs are unknowingly underestimated - even in an “honest” admission to oneself)

    There are two eternal questions: where does the dust come from and where does the money go and if accounting for home finances does not help you with the first question, then the second goal will be achieved automatically.
    I can’t even list all how many things are forgotten on the machine. Spent a taxi - like a penny, but at the end of the month you are horrified how much happened. Suddenly a friend raced in - and how much the drink had cost. Impulsive purchases ... there are so many that no salary is enough. I want to feel the new gadget - and here is another hole in your pocket. Game currency is so similar to candy wrappers - and the hole in the budget is very thorough.

    It’s not suitable for everyone to set goals immediately (“save monthly the amount of xxx rubles”), many may not be able to do this. During the year, something seasonal will happen that you will take into account poorly. For the second or third year, you will already be able to plan a budget, say, how much and what kind of clothes you will need to buy by the fall, how much will go to the dentist - and in the first year, your numbers will probably fall into the milk more than the bull's-eye. It doesn’t work - leave it, even if you firmly master the first level - it is much better than moving to the next level with two penalty points and two lives.

    Level two

    Budgeting is the key word of the second stage. After you went through the zero circle of hell and didn’t give up those damned home finances (and your share of the undisputed is less than 5-10% of the salary), after you diligently wrote down the expenses and looked at the monthly cash flow reports from month to month - the time is coming when, unconsciously or consciously, you will switch from passive monitoring WHERE I SPEND to active spending management I WANT TO SPEND THERE. And this almost always means BUDGETING.

    I don’t urge you to go sequentially - and spend exactly one year first on recording expenses, then a year on the budget - these processes somehow quite naturally go one parallel to the other, your level of financial literacy, knowledge and skills just gradually rises. And therefore, to say that the second stage will begin exactly one year after the start of accounting is very conditional, for sure some attempts to try to manage expenses (even if in a simple version, so that the expenses do not exceed income) will be necessary, it just may not always be successful.

    What you need to know about budgeting? Oh, this is one of my favorite topics that I can talk for hours on end. Now I’ll try to give only the most important things that I myself have come to from personal experience - and which will probably be useful to the majority, and not to me personally.

    1. Remember the most important thing: your first forecast will probably be extremely inaccurate and budget execution will be VERY very different from planned. Do not be afraid! Literally three or four monthly plans - and you will notice that each subsequent plan is executed much better. These are the realities that ANY people know who have encountered budgeting (whether personal or corporate): the first budget is extremely poor, the second is more accurate and the forecast is made extremely accurate six months later. After two years, you will precisely plan not only the purchase of seasonal shoes, but also large household appliances (without getting into the minus), you will understand where, how - and most importantly how much - to temporarily save on other articles, say, on food . The basis of this is in a clear understanding of where the money goes (see the previous paragraph).

    2. Do not try to keep track of your expenses in the same program and the budget in it. Keep a budget in Excel for a calendar month. I have not seen good programs that are good at both. Have you heard a tale that cool top managers do not compose a program in cool programs like SAP, but do everything on a piece of paper? A bike with a bike - and believe me: Excel is a very flexible thing, well suited for budgeting. You and the program torment yourself more than once.
    In general, this is perhaps all that I can say about budgeting - for the first time, these tips are quite enough for you. I don’t give any methods - it’s better to choose for yourself, although if I want to listen to my own experience, I use rolling budgeting. This is such a wonderful thing when you paint a plan for a year in the most general settings, without detailing - and make a detailed plan for three months. A month has passed - you shift the plan and again plan in detail for the next three months, and in general terms - again for a year. But I recommend starting with the simplest: a periodic budget. We planned for a month - at the end of the month we looked at the results, smacked in a broken language - and began to plan the next month. Master - you can try something of your own.

    So what is next?

    What will happen when you get another thousand experience points and move to the next level?

    You know, hereafter, different people have everything individually folded. Life is such a thing that constantly makes its own adjustments. When you buy stocks - they will show you how your money will grow all twenty years in a row - but in fact, every five years there will be a financial crisis or a bad year in your fund. So it is here: you can move to another city (country), your family status may change, children will be born - but you never know what can happen. Want to ridicule god? Tell him about your plans. Therefore, what will happen two or three years after you start conducting home finances is very difficult to tell: people are different (they started from different points, they set different goals) and life will make its own adjustments.

    I would recommend the following things: try for yourself such a thing as bank deposits. Some people manage to make savings without taking into account finances - but most people usually don’t get it somehow. Even at the beginning of accounting, it turns out to be difficult: opened for six months - and then - bang! - in a month - and you close, because the money was needed.

    Get used to keeping a monthly contribution on hand on a short deposit, and the amount of three to six salaries is a little further away so that you are not tempted to spend. Suddenly you get sick or lose your job (pah-pah-pah!) - It can be very useful. Let's say you will not rush to the first job advertisement that has come to hand - you want to see something better and more interesting.

    Play around with credit cards (but don't play around). At one time, many people indulged that with a credit card for three hundred thousand rubles they removed all the money in a tricky way without getting on a commission for withdrawing cash (previously the telebank was amazing for this, and now there are at least two or three ways left) and for now the grace period did not fit - they turned off money on a short-term deposit. (I paid off the grace - and again on the next lap). When you have free money and you live long periods, you will get used to open deposits in reserve (now, for example, there are no deposits at 15% per annum - but three years ago you could open a small deposit for the future - and now it will come in handy).

    I don’t really share the enthusiasm about Kiyosaki, but some things can be reasonably used. After a little risky tools, you can move on to more risky ones - however, I personally was not interested in this and I have nothing to recommend especially. Do not play for the last money - it’s too corny (although the wisest things are commonplace, like five cents), remember that there will always be a white stripe behind the black stripe (buy up assets during the periods when they become cheaper - and in fat years prepare a reserve to ride the next wave ) also sounds somehow vague.

    From personal

    It was natural for me to give pocket money to a child from the age of six, so that I could train a little. When he went to school, he received 50 rubles a day for attending classes and working there. Later - differentiation of salary depending on academic performance (I do not recommend doing it in the first two academic years). The child gradually gets used to the money, learns to "put aside half and spend the second." The kind of dad who deposits checks has been captured since childhood.
    I always kept cash accounting accurate to the ruble - I’m not so pedant, it’s easier to round off a penny and not to steam.

    I have not many budget items - and I do not recommend doing a lot. Say, there is no need to detail how much is spent on cucumbers, and how much on potatoes - just write “food”. (At one time I took into account alcohol out of curiosity - in order to know purely for myself, then I abandoned it). The biggest evil - do not try to take into account the "warehouse" - keep records of finances. (Many programs allow you to keep track of pieces and there is a temptation to transfer rubles from one account to an account in pieces). In general, later there will come an understanding that the lack of stocks in production (and at home;)) is one of the wisest economic innovations. With food, it is enough to divide purchases by food purchased at the store and cafes / restaurants / canteens.

    Three years ago, I remembered about voucher privatization, took my shares from my parents. Tokur-gold went bankrupt, Avva depreciated, and a share in alpha capital costs about four hundred rubles (it was especially curious to see the dynamics of value over the past years). Perhaps my children will be more successful, at least I hope that their level of financial literacy will not be as low as that of my parents - and even more I wish not to become too greedy for money and not be stale hunks, everything is good in moderation. I read from Something


    in due time that the most accurate sign of poverty is when more than 25% of income is spent on food. I periodically check for myself. For food, it takes me a maximum of 12-17% of the salary, so in theory I'm not poor)) (And I wish you the same.)

    I don’t remember where I dug up this info, if you share information (even if it refutes) - write to me, I will be grateful.

    And finally.

    If someone has questions (maybe someone has already passed the first stages of accounting for finances, it is possible that someone is interested to hear more about the initial stages) - I will answer as much as possible in the comments.

    It’s not very interesting for me to talk about Kiyosaki and other financial advisors: the most important lesson that Kiyosaki could give is not that “the number one way to make a lot of money is to write a book how to make a lot of money”, but that it will work a lot of money is only one who likes his work, everything else is really very individual. Entrepreneurial vein is found in God forbid 6% of the population, and now wherever you spit - they want to open all their businesses.

    To ask me about specific programs is also stupid - I’m good if I remember a couple of names, except for the one in which I keep records.

    PS I myself would read others on the topic of home finance, is anyone interested in sharing their experience?

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