Speaker 1: Budget Better bonus series Step one, Look to the Past.
Speaker 2: Welcome to the Frugal Friends podcast, where you'll learn to
Speaker 2: save money, embrace simplicity, and liver your life. Here your
Speaker 2: hosts Jen and Jill.
Speaker 1: Welcome to the Frugal Friends podcast. My name is Jen,
Speaker 1: my name is Jill, and we wanted to give you
Speaker 1: a little post holiday gift or mid holiday or mid
Speaker 1: holiday gift wherever you're at, and we wanted to help
Speaker 1: you budget better in twenty twenty five with a three
Speaker 1: part bonus series we're calling Budget Better, and today's first
Speaker 1: step is looking to the past.
Speaker 3: We're also going with a little bit of a Christmas theme,
Speaker 3: Past present, future, so this is like what you can
Speaker 3: expect from it.
Speaker 1: Think about that.
Speaker 3: Oh yeah, the ghost of Christmas past, present, in future.
Speaker 1: It all makes sense.
Speaker 3: So this so today we're looking to the past. We're
Speaker 3: just doing a quick twenty minute episode. Then we're going
Speaker 3: to release part two, which will be Step through, which
Speaker 3: is the present changes you can make now, and then
Speaker 3: we're going to do Step three plan for the future.
Speaker 3: So this is all happening kind of right in a row.
Speaker 3: So if you love getting content from us, keep tuning in.
Speaker 1: Yes, okay, so as the ghost of Christmas past, I'd
Speaker 1: like to take you on a journey to your past,
Speaker 1: but not to make you feel guilty or like a
Speaker 1: bad person. We are I'm feeling like more like a
Speaker 1: muppet like now, I'm feeling like like a kermit. I
Speaker 1: want to help you. I want to encourage you and
Speaker 1: help you feel neutral about your spending. So before we
Speaker 1: get into the past, let's just set a foundation of neutrality.
Speaker 1: We are looking and we're not judging. That's really what
Speaker 1: we are doing. So let's start there, and then we
Speaker 1: are going to do a walkthrough of the last ninety
Speaker 1: days of our transactions. And yes, I understand it's the
Speaker 1: end of December. You might want to go Hey, all
Speaker 1: of my spending was really wonk you over the holidays.
Speaker 1: I'm just going to go back to like August, September, October,
Speaker 1: much more normal. And no, we really want you to
Speaker 1: go through the last ninety days. And here's why. It's
Speaker 1: because this is a more accurate depiction of your current
Speaker 1: habits now and so we'll talk about that tomorrow. But
Speaker 1: we're looking at the most recent past. So not no
Speaker 1: eletons in your closet, because when we go back to
Speaker 1: the past, past, the way back. That doesn't help us
Speaker 1: get to the now or the future. It just makes
Speaker 1: us feel sad.
Speaker 3: Yeah, if you are a listener of the Frugal Friends podcast,
Speaker 3: you know we've talked about a ninety day transaction inventory.
Speaker 3: It's also one of the things that we go in
Speaker 3: depth on in the book by what you Love without
Speaker 3: Going Broke. And if you are a visual person, you
Speaker 3: can get a walk through video of the ninety day
Speaker 3: transaction inventory on the with the Resources page, so everyone
Speaker 3: who gets the book just gets access to that. We
Speaker 3: mention it throughout the book, so make sure you do
Speaker 3: that so you can also have a visual element and
Speaker 3: component added to this. This is one of the first
Speaker 3: steps that we recommend before even considering creating a budget,
Speaker 3: because we have to know what are our current spending habits,
Speaker 3: how do we engage with money, where are impulse spending
Speaker 3: transactions happen to even know the shifts that we need
Speaker 3: to make and what we want to be doing with
Speaker 3: our money, how we want to be allocating it. So
Speaker 3: what we're going to do is collect the last ninety
Speaker 3: days of transactions. This is going to include going back
Speaker 3: to your credit card statements, your bank statements and getting
Speaker 3: it all into one spreadsheet and and sorting it that way.
Speaker 3: But we also want to include every single transaction, so
Speaker 3: we're not excluding what we're paying for rent, what we're
Speaker 3: paying for our mortgage, some of our more fixed expenses.
Speaker 3: We want to be able to look at the whole
Speaker 3: picture of all of our spending over the last ninety days,
Speaker 3: So get that into a spreadsheet to be able to
Speaker 3: then visualize this. The cool thing about a spreadsheet as well,
Speaker 3: is we can then order it however we want. We
Speaker 3: can order it by date, we can order it by location,
Speaker 3: we can order it by spending amounts, so that there's
Speaker 3: a variety of ways that we can kind of observe ourselves.
Speaker 3: Another kind of piece that we want to add to this,
Speaker 3: and you've heard us describe this before, but the questions
Speaker 3: that we're going to then eventually ask ourselves about these transactions,
Speaker 3: we want to avoid the why question. So once we
Speaker 3: have this whole ninety days of transactions compiled, and whether
Speaker 3: you're going to work in a spreadsheet digitally or you
Speaker 3: print them out, you can do that too. If you
Speaker 3: do print it out, I would just recommend having it
Speaker 3: in order, in date order, and you can kind of
Speaker 3: look at the various components that way as well. But
Speaker 3: then what we want to be doing is having a
Speaker 3: almost journal prompt in the column to the right of
Speaker 3: each transaction, where we're able to ask ourselves questions like
Speaker 3: what came just before this purchase, how did I feel
Speaker 3: about this purchase? Did it achieve or get me what
Speaker 3: I wanted this spending to get me? Of course we're
Speaker 3: not going to remember that with every single transaction, but
Speaker 3: as much as we can looking back to it, this
Speaker 3: can also help us to understand some of the habits.
Speaker 3: We can look at, you know, kind of what is
Speaker 3: the queue that might have led to this spending, is
Speaker 3: their location, proximity, time of day, people that I'm around,
Speaker 3: and asking ourselves what led to this spending, not why
Speaker 3: did I spend so much here? That's going to be
Speaker 3: one of those ways that we can approach this ninety
Speaker 3: day transaction inventory with neutrality is by not asking ourselves
Speaker 3: inflammatory questions.
Speaker 1: Yeah, so if you don't want to do a spreadsheet,
Speaker 1: if that feels a little overwhelming, you can also use
Speaker 1: your budgeting app. And so this is going to work
Speaker 1: best if you're using an app that you pay for
Speaker 1: that has transactions automatically uploaded. I know with the fall
Speaker 1: of Mint, there's not a lot of if any free
Speaker 1: budgeting apps that can do that for you. But if
Speaker 1: you do payper one like wine app or Monarch, which
Speaker 1: is our favorite one right now, then this you can
Speaker 1: do this really easily. You can sort it by category,
Speaker 1: by place, by date, and it brings It's very versatile,
Speaker 1: so you can look at these patterns more easily. But
Speaker 1: otherwise a Google spreadsheet will do just fine.
Speaker 3: And you can if that sounds interesting too, frugal friendspodcast
Speaker 3: dot com slash Monarch, I think that they're running a sale.
Speaker 1: Yes, if you use Frugal friendspodcast dot com slash monarch,
Speaker 1: you get thirty percent off of your first year, so
Speaker 1: that's really great.
Speaker 3: So when we do this ninety day transaction inventory and
Speaker 3: we've got it all gathered in our way that feels
Speaker 3: best to us, again, whether that's paper or digitally or
Speaker 3: through an app, and we're starting to see where our
Speaker 3: spending is happening, noticing any patterns that might be coming
Speaker 3: to the surface because of these non judgmental why questions
Speaker 3: that we're asking ourselves. A couple of things that we
Speaker 3: can expect to see is patterns, patterns of spending, patterns
Speaker 3: of behavior. We will probably start to see maybe what
Speaker 3: type of impulse spender we are. Whether we are primarily
Speaker 3: making unplanned purchases out of habit, if we're making unplanned
Speaker 3: purchases because of social influence, We're making unplanned purchases because
Speaker 3: we like to shop as an activity or as the
Speaker 3: result of stress or other ranges of emotion. Maybe it's
Speaker 3: the thrill of the hunt. We are impulse spending on
Speaker 3: any deals or price reduction stickers that we may see.
Speaker 3: These are the types of things that are going to
Speaker 3: be informative for us when we do get to that
Speaker 3: point of making a spending plan, because the ways in
Speaker 3: which we shift our behaviors need to be congruent with
Speaker 3: the behaviors that need to be shifted. And so that's
Speaker 3: something that the ninety day transaction inventory can bring to
Speaker 3: the surface, is how am I even engaging in this?
Speaker 3: In what way am I spending maybe unnecessarily or in
Speaker 3: what ways do I want to be shifting? Do I
Speaker 3: not even remember some of these purchases that I made,
Speaker 3: and therefore I can say that wasn't actually that important?
Speaker 3: So I might be able to eliminate those things, so
Speaker 3: we can start to get an idea of the purchases
Speaker 3: we felt really good about, the ones we forgot kind
Speaker 3: of the easy knows, and start to kind of parse
Speaker 3: this out of what do I want to keep for
Speaker 3: the future, what feels good to me and congruent with
Speaker 3: my needs and my values, and what of this can
Speaker 3: I start to put on my easy no list. This
Speaker 3: is going to be an easy thing to throw out
Speaker 3: or at least for a time, say no to.
Speaker 1: Yeah, that no list is so important to make, and
Speaker 1: we'll go into that a little bit more in the
Speaker 1: next in tomorrow's episode, But we need to have a
Speaker 1: no list and a yes list. We need to have
Speaker 1: both lists, and they don't need to be long, especially
Speaker 1: when you're first starting out, but we need to start
Speaker 1: drawing some lines in the sand of These are the
Speaker 1: things I will not buy anymore because I don't want
Speaker 1: to buy them. And these are the things I will
Speaker 1: buy without guilt because I love to buy them regardless
Speaker 1: of what other people think or what other people want
Speaker 1: me to spend on. These are my three to four
Speaker 1: things on each list that I'm going to either buy
Speaker 1: or not buy.
Speaker 3: And that's talking about some of this discretionary spending, But
Speaker 3: as we mention, all of your more so fixed expenses
Speaker 3: are also on this ninety day transaction inventory. So this
Speaker 3: is a good time to even be able to question
Speaker 3: some of those expenses. We're not saying you're going to
Speaker 3: be moving in the next month or now you automatically
Speaker 3: have to sell your car, but it is worth being
Speaker 3: able to look at these larger expenses, the things that
Speaker 3: take up the majority of our budget, and are there
Speaker 3: questions and considerations that we can be asking ourselves when
Speaker 3: it comes to housing. If you are thinking about moving soon,
Speaker 3: certainly this is a good opportunity to look at what
Speaker 3: am I currently spending on housing? What would my goal
Speaker 3: be for the next place that I live? How much
Speaker 3: of my income could I allocate here? It could also
Speaker 3: be as simple as are there ways of reducing my
Speaker 3: insurance costs on my house or rental costs at the
Speaker 3: place that I'm living? Are there things that I can
Speaker 3: do when it comes to transportation to be able to
Speaker 3: reduce those costs? And planning on buying a car soon,
Speaker 3: should I be considering what type of vehicle and what's
Speaker 3: going to be kind of within range for the money
Speaker 3: that I have and the goals that I have with
Speaker 3: my money, And again as simple as are there ways
Speaker 3: to reduce insurance costs and kind of my monthly overall
Speaker 3: expenses if I'm not planning on making a big purchase,
Speaker 3: massive money decision when it comes to these things, and
Speaker 3: of course food is a massive area of spending for
Speaker 3: a lot of us. What am I noticing specifically as
Speaker 3: it relates to my food purchases, my food habits, How
Speaker 3: might that inform the way that I want to engage
Speaker 3: with this aspect of my lifestyle. So some of these
Speaker 3: fixed expenses can still be questioned at this stage.
Speaker 1: It's important to look at the past because and especially
Speaker 1: not to separate housing from transportation. They are intertwined. I know,
Speaker 1: so much of the advice that we hear is you're
Speaker 1: looking at your housing and you're saying, oh, can I
Speaker 1: move maybe a little further away to save on housing,
Speaker 1: and they don't take into consideration transportation, where if you're
Speaker 1: breaking down the costs and looking on what you've spent
Speaker 1: in the past, you can maybe see maybe it is
Speaker 1: more I save more money by moving closer to my
Speaker 1: job and having higher rent, because then we can go
Speaker 1: down to one car and I save an entire car payment.
Speaker 1: So when we look at the numbers from the past
Speaker 1: instead of just blindly like following financial advice from people
Speaker 1: who don't know us, then we can make informed, mathematically
Speaker 1: accurate decisions for our situation. And it's the same with food.
Speaker 1: If we're looking at our past food spending and we
Speaker 1: are looking at these triggers that come around food, so
Speaker 1: I'll just we use the cues from atomic habits, so
Speaker 1: time of day, location, preceding event, or preceding location, other
Speaker 1: people that you're with. So this is a real These
Speaker 1: are really good ones to use for food because food
Speaker 1: tends to be a habit purchase more than anything. So
Speaker 1: looking at each of your food purchases and trying to
Speaker 1: connect them back to one of these habit cues or
Speaker 1: triggers can help you choose which one that you might
Speaker 1: want to focus on when we go into our next
Speaker 1: phase tomorrow.
Speaker 3: Well, this leads us to one of my favorite parts
Speaker 3: of typical life.
Speaker 1: We say, yeah, even in a bonus round, we can't
Speaker 1: get you can't get rid of it, the lightning round
Speaker 1: poo pew.
Speaker 3: Sorry, friends, we don't have a bill of a week
Speaker 3: in our bonus.
Speaker 1: I know those are special.
Speaker 3: We might have been letting you down just now, but
Speaker 3: you did get the sound effects.
Speaker 1: All right, So what is something? So we recommend doing
Speaker 1: a ninety day transaction inventory once a year, no matter
Speaker 1: how long you've been budgeting, no matter where you're at.
Speaker 1: There are some things that you can do less often
Speaker 1: after you've been doing them for a while, but always
Speaker 1: to do a ninety day transaction inventory at least once
Speaker 1: a year. When you're starting out, you may do it
Speaker 1: three or four times a year. It's really beneficial to
Speaker 1: take that inventory more frequently when you are first learning
Speaker 1: this stuff. So in our last ninety day transaction inventory,
Speaker 1: we're going to share with you what's something that you noticed,
Speaker 1: and I will go first. So for me, I don't
Speaker 1: budget monthly anymore, and so I keep an eye. I
Speaker 1: do use Monarch. It's not just something that I like
Speaker 1: promote and I love the option to have a widget
Speaker 1: on my phone with my most recent transactions there. So
Speaker 1: I keep tabs on the transactions. I make sure the
Speaker 1: transactions are all ones that I have made or Travis
Speaker 1: has made. That's a big, a big reason to be
Speaker 1: continuously checking in with your spending to make sure nobody
Speaker 1: has taken your credit card information buying things without your knowledge.
Speaker 1: But so, yeah, I do that, And I look at
Speaker 1: the cash flow when we're doing our transaction inventory, and
Speaker 1: something that surprised me was the amount of excess we
Speaker 1: had each month when it felt like we were just
Speaker 1: like I knew we were breaking even, but to see
Speaker 1: month over month the amount of cash flow extra cash
Speaker 1: flow that we had was encouraging and.
Speaker 3: Oh nice, like you were living kind of lower me
Speaker 3: without really putting that much intention into it. Just it's
Speaker 3: natural life.
Speaker 1: And I knew we were doing it. I knew. It's
Speaker 1: one of those things like I knew we were doing it,
Speaker 1: but you still, like, without checking in, you can't be sure.
Speaker 1: And so that's why we also tell people when you
Speaker 1: do something like this, the anticipation is always worse than
Speaker 1: the actual end result. You always think it's going to
Speaker 1: be worse than it actually is.
Speaker 3: I think, yeah, in part because even if there's big
Speaker 3: shifts that need to be changed, just pulling the veil
Speaker 3: back and looking can help to remove some of that
Speaker 3: that shame, that fear. Being able to look at something
Speaker 3: and know the realities of it can automatically dissipate some
Speaker 3: of those the mystery of it.
Speaker 1: Yeah, but I was happy with what all of our
Speaker 1: spending was. That's cool the year.
Speaker 3: Do you have a preferred way of arranging the transaction inventory?
Speaker 3: I like to do it by date, but do you
Speaker 3: have a preference.
Speaker 1: I also like to do it by date in groups
Speaker 1: of months. Monarch makes it very easy to do that,
Speaker 1: to see it month by month, or to see all
Speaker 1: the transactions together. But there were sometimes where I forgot
Speaker 1: or maybe it was like mismarked. It was at the
Speaker 1: very end of the month, so it was put into
Speaker 1: the next month when it should have been in the
Speaker 1: last month. It was then easy to click on that
Speaker 1: transaction and see all those transactions back to back.
Speaker 3: Yeah.
Speaker 1: So that is and that's something easy you can do
Speaker 1: in the Google sheet too, when you just sort buy
Speaker 1: out like alphabetical and you can see all of the
Speaker 1: all of one transaction type in a row. Yeah.
Speaker 3: Yeah. For me, I noticed that we spend the majority
Speaker 3: of our money on the weekends. We don't really leave
Speaker 3: the house very often during the week. We work from home.
Speaker 3: I've gotten really good at eating at home and meal
Speaker 3: planning and cooking throughout the week. But then I think
Speaker 3: because of that, just because we're human and we need
Speaker 3: to get out and we need some sort of difference
Speaker 3: in stimulation and spontaneity, that will then be when we
Speaker 3: kind of make all of our purchases, and some of
Speaker 3: them are necessary, like we're running our errands, it's when
Speaker 3: we're getting our groceries. But it kind of then spikes
Speaker 3: on the weekends and then dips during the week, And
Speaker 3: so in some ways it helped it inform are there
Speaker 3: ways that I can rearrange what I do during the
Speaker 3: on the weekends, Like, is some of this just to
Speaker 3: get me activity? Is some of this shopping as an activity?
Speaker 3: What of this is actually getting me like the things
Speaker 3: that I need and want? Where can I make shifts?
Speaker 3: So it has led to just a greater awareness of
Speaker 3: free activities both on the weekend and throughout the week,
Speaker 3: knowing I do need to get out, but I don't
Speaker 3: necessarily want that to lead to increased spending, and how
Speaker 3: can I kind of spread this out a little more
Speaker 3: so it doesn't feel like whiplash for me throughout the week. So, yeah,
Speaker 3: interesting observations.
Speaker 1: Yeah, Well, thank you so much for joining us in
Speaker 1: step one of the budget Better Bonus series. Tomorrow we
Speaker 1: will be back with step two, which is what do
Speaker 1: we do with changes now as a result of what
Speaker 1: we've learned from our past transactions, See you then. Frugal
Speaker 1: Friends is produced by Eric Sirianni