I opened my first bank account at a small local bank as a junior in high school, primarily as a place to deposit paychecks from my first “official” job. I started religiously saving every receipt and at the end of the month I would write down every transaction by hand in the ledger.
Later when I was working during college I closed this account and opened one with a more prominent bank with a debit card and access to ATMs. This newfound easy access to my income was likely no small part to my financial downfall – I was not a social creature and liked to avoid human interaction whenever I could. But now I could go to a machine and get money in a minute, or just use my debit card! The wonders of modern technology!
My wallet was thick – with receipts, but never with money. Eventually I ditched the paper ledger and started using my own spreadsheet to keep track of my deposits (few) and withdrawals (many). I called it “Personal Maintenance” – because I copied it from a spreadsheet of the same name that I used to keep track of my workload and hours at my first data entry job out of college. I expanded it to cover my newly opened credit card account as well. I felt good about the fact that, at any point, I could see what I was spending my money on. Not that I ever did of course.
Even with all of this, there was no tracking (much less limiting) of spending going on – it was “Am I gonna hit $0 before the next paycheck? Well… put it on the credit card” I didn’t often carry a high balance, but most months I was charged some amount of interest. In fact, all of the finance charges added up to $900 over 17 years. Many people I know fared much much worse during the same time frame. Still that $900 in interest bought me nothing tangible, it brought no value into my life – I paid the credit card company for the privilege of owing them more money. I wasn’t horrible with credit, but I was still bad with money.
Most of the charges to my credit card in the years right after college were “BAR”, “CARTON OF CIGARETTES”, “AUTO – GAS” and “FINANCE CHARGES”. Keep in mind that this was just what I used my credit card for, my spending from my actual checking account was much worse. There was no idea of “savings” since I had no financial goals – I worked just to eat, drink, and play my money away. This was when I lived at home, which was very generous of my parents, but I was such an idiot for not budgeting properly and saving to take full advantage of that great opportunity. As time went on I eventually got a job a software developer, and I did what most Americans do when recognizing an achievement – I rewarded myself with a new car. -_-
Eventually I met my wife and life necessitated that we kept better track of what we spent money on. But it wasn’t until (three fully financed $20K+ car loans later) we discovered the financial independence movement that we really tried to cut back on expenses and truly changed. Looking back now, at 37, I cannot help but wonder how much closer we would be to our goals if we had tracked, budgeted, and saved our money when we were in our early 20s instead of our mid 30s. As tempting as it is to do the math… I don’t own a time machine. Finding out that we could have already been financially independent now or even a few years ago would accomplish nothing positive. The only thing that we can do now is to document our failures along with our successes, and hope that others can learn from our experiences.
Tracking your money without analyzing your habits and making changes is like holding a $100 bill and watching it burn. Then instead of trying to put the fire out, you just drop the bill and grab another.