F Money

Dan: 00:00

Hey, everybody. Welcome to another episode of the F Money podcast. Learn the personal finance lessons you wish you were taught in high school. My name is Dan. I'm solo this week for a mini episode where I cover how to analyze your spending habits.

Dan: 00:14

Before we do that, I wanted to fill in a few gaps from last week's episode. We would love for all of you to follow along with us and look at each week's topic in your own life. To make this easier, we've landed on full episodes every other week with mini episodes on the off weeks. Last week's episode was on budgeting, so we would love to see everyone create a budget. We'll link a Google sheet in the show notes.

Dan: 00:35

You can make a copy for yourself and fill that in with your monthly numbers, you know, include your rent, mortgage, car, utilities, and then you get to the bottom where there's other spending. This number is everything else you buy, groceries, gas, restaurants, shopping, etcetera. If you pay for most things with just 1 or 2 debit cards or credit cards, it should be pretty easy to figure out. Once you have that number, it's good to analyze it, which is what this mini episode is about. So let's get into it.

Dan: 01:06

Running through this exercise will give you some insight into where you're spending your money and help you follow along with the conversation on next week's episode. Your bank or credit card might already give you some categories. And if they do and you like those categories, great work. Here's a virtual high five. My bank does give me categories, but they're about as useful as a spacesuit on the sun.

Dan: 01:26

Not useful at all. For example, Netflix is categorized as household, and maybe that's fine for some people. But for this exercise, I wanted to know a little bit more. There are a lot of ways to do this depending on your technical ability. I'm gonna focus on the simplest, most manual way that anyone with a little bit of spreadsheet knowledge should be able to use.

Dan: 01:43

1st, you need to export 1 to 3 months worth of your transactions from your bank or credit card. Try to get an Excel or CSV format. Open up those transactions in your favorite spreadsheet tool. You do have a favorite spreadsheet tool. Right?

Dan: 01:56

How you export these will be different depending on your bank. So those instructions have been left to the listener. Next, we're going to clean up the transactions a little bit. You might have some extra columns or 2 columns for your debits and credits. I consolidate these into a single column with positive and negative numbers.

Dan: 02:11

I rarely return things, so the only negative number is my payment. When I'm done Marie Kondoing my transactions, I have 3 columns, date, description, and amount. Either insert a column or add 1 to the end called category, then sort by description. When you sort by descriptions, you'll get the things that repeat multiple times next to each other, which makes them easier to classify. Try to target half a dozen categories, Something like household, groceries, restaurants, entertainment, pets, and shopping is a decent place to start.

Dan: 02:42

You may need a category for wellness or hobbies, especially if they're an expensive kind. Looking at you, musical equipment. Remove any rows for things that are part of your main budget, like utilities or your car payment, but that you pay for on your credit card. On last week's episode, you heard that we track those separately. Once all your categories are filled in, you can sort by category.

Dan: 03:02

And then you can sum these manually, use sum of formulas, or pivot tables. I know pivot tables pretty well, and I will always write custom formulas instead. They are far superior. But in this case, where we want some quick answers and don't have ongoing changes, pivot tables might work well here. So if you know them, I would recommend you use them.

Dan: 03:21

You should calculate percentages as well. Take the sum of the category and divide it by the full total. Now be amazed that you spend 80% of your budget on figurines so small you can barely see them. I'm sure it's a lovely collection. And just like that, we're done.

Dan: 03:36

You can see the percentages of your budget, where you're spending your money, and where you're not spending your money. You don't need to do this every month, but it's good to look at this in the larger context of your spending and budgeting. So join us next week as we dig into Sarah's spending habits and have a few more jokes. Please subscribe on Apple, Spotify, or wherever you get your podcasts.