How to manage your money yourself, like a fucking grownup: Part 2
Take a good look at your money
Just landed here? You might want to start with part 1.
First things first, let’s get everything together and see what we’re working with. This is the least fun part of the process and will involve loads of Googling, searching through old emails for fund fact sheets and trying to remember what your bloody password is for your car loan website. Book out a couple of hours on a Sunday and just do it. Everything after this is easier. Promise.
Step 1: Aggregate your transactions and accounts
Sign up for a money management tool that will aggregate all of your accounts, let you make a budget, and, most importantly, will categorise your spending for you so you can get a realistic idea of what you spend your money on every month.
There are some great money management tools out there. Personally, I think 22seven is the best in South Africa, but I’m biased because I work there. Here’s a longer list of international services you could try. Just make sure your tool is secure, and that it will update your money stuff automatically, because nobody’s got time to be uploading spreadsheets every month.
Link every single money thing you have into this tool: the loans, the store cards, the reward points, all of it. You can only decide what to do when you really know what you’re working with.
Once you’ve linked everything, spend some time setting up the tool to make it work for you. You might want to, for instance:
- Set up the categories so that they make sense for your life. I like to rename my categories and put emojis on the ones that make me happy. Yes, I do have a category for “Smokes & beer”, shut up.
- Check that the service has categorised all of your transactions correctly. Automatic categorisation systems are pretty great these days, but none of them are perfect. Spend 30 minutes or so checking all your transactions are in the right place so you have an accurate view of where your money really goes.
- Tell the system what day of the month is the “start” of your month for budgeting. I like to budget payday to payday (like most people), so I tell the system my months run from the 25th to the 24th.
Step 2: Do some analysis
Once you’ve done that, complete this lovely worksheet I made for you. You’ll need to make a copy for yourself before you can do anything with it. Go to “File > Make a Copy” and you’ll be able to edit your own version of it.
The most important thing is to get all your account information together, including figuring out what interest rates and fees you pay for things. This process is a ballache. You’ll need to go digging around in old emails, search the company websites, email your broker (ugh), to find the information. Realising how hard it can be to figure out how much you’re paying for other people to manage your money for you might be a helpful reminder of how much the industry actively tries to hide this stuff from you. But soldier on! You can do eeeet, guy!
The rest of the worksheet should be pretty easy to fill out, with the help of your handy new money management tool.
When you’re done, this worksheet should give you an overview of:
- How much money you really have, owe and can borrow.
- Which accounts that money is sitting in, and what the fees and growth rates have been on those accounts (we’ll use this in part 4 when we figure out which ones to close or replace).
- Your main money goals (we’ll talk about these in part 3).
This worksheet will also tell you the single most important number you need to know: your Spend Ratio (SR), or what percentage of your income you spend, rather than putting towards Future You (money you invest, save or use to repay debt). We’ll come back to this number later.
A footnote about the feels:
This part of the process kind of sucks. Kind of massively sucks, actually. Brace yourself for experiencing some powerful emotions when you see everything you’ve spent, all your debt, and all your half-forgotten accounts there in black and white. Feeling these emotions is a good thing, because it’s part of getting honest with yourself and seeing how you need to change. Just remember that this is a picture of your past. It doesn’t have to be a picture of your future.
And that’s it! Pat yourself on the back, you grownup A.F. human :) You’ve got all your stuff together. Now let’s move on to deciding what to do with it.
