This week starts a new month, which means new topics! This week was about reflecting on where we’ve been this year, updating our net worth statement, and doing a 6-month spending analysis.
Gail started this month by having us reflect on the journey we’ve taken so far this year. It seems ages ago, but back in January we had written out our Core Values and also listed our goals in a prioritized list.
It was interesting to revisit the goals list (something I had actually forgotten about!) and see what I accomplished so far. Looking at the list I realized my priorities shifted for some of my goals. Some of my “must do” goals have become “want to do’s” and moved further down the list. Some changes in priority have come due to the pandemic and accessibility, such as finding a volunteer position, and others simply because of a change in mindset.
I’m grateful that I’ve still been working through this year, so my spending and earning has been essentially the same for 2020 as any other year. For the tools that Gail’s been introducing this year, I am a HUGE advocate for the spending journal.
I’ve written down every purchase I’ve made since 2012. I have a new section in my notebook for each month and tally up each section every few days. I use it to keep track of how much money I have left in each section of my monthly budget for my main categories of spending.
It’s been a tool that’s allowed me to stay on budget and gives me the accountability I need if I make a larger purchase or “splurge” on something. I believe it’s okay to spend a little frivolously now and then, as long as there is that accountability and I stay on budget.
I’ve spent a lot of time over these last couple of weeks reorganizing my savings and opening up some higher interest savings accounts. It was really encouraging to do an updated Net Worth Statement to see the progress I’ve made so far this year. Whether it’s your first one or an updated one, I highly recommend making one of these statements to get a concrete picture of your finances.
You can find the Net Worth Statement worksheet and instructions here:
The Ebbs and Flows of Life
These tweets weren’t specifically tagged with #MoneyMasterClass, but I love a little bit of Gail Vaz-Oxlade wisdom, so am including them here too.
Spending Analysis – How to Start
The big task for this week was creating a spending analysis. I’m going to do another plug for having a spending journal here before digging in. The spending analysis was so easy to do with my spending journal because I already had every transaction written down and separated by month and category. All I had to do was plug the numbers into the spreadsheet (found here) and look at the results.
If you don’t yet have a spending journal, here are the steps Gail’s laid out:
1. Gather 6 months of all your statements (pre-covid is probably most helpful)
2. Separate the statements by month
3. Number all statements in your first month #1, second month #2, etc
Spending Analysis – The Why
Spending Analysis – Entering the Numbers
Now you take each pile of statements and enter the details into the spending analysis worksheet. The worksheet has a LOT of categories and you can edit those as you need to. I changed the name of some categories to make them more applicable for my spending.
If your statements are not detailed, make the best choice you can with the information you have. The idea is to give a picture of where your money goes to. I realized when looking at my spending journal I don’t have the exact type of spending broken down. For example, I lump in personal care items with groceries as I buy them at the same store. Going forward, I’m going to be a bit more detailed to get a more realistic picture of my spending.
Preparing for the Rain
Gail closed out the week with a reminder why it’s so important to be learning these tools. She is really giving us the ability to weather the storms that come our way.
Have you done your spending analysis and updated your net worth statement? What did you learn from them?
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