Towards a Money Spending System

While at university, I started to think about where my money was going. As a computer science student, I started thinking of how money could be integrated into my life as a system just like a computer. I asked myself a couple of questions such as: Where and when did I spend my money?  What was my psychology when I had less money in the bank versus more? These existential whims just had to be answered by way of a practical money spending system.

 

Though it didn't turn into a masterplan to get rich in 5 seconds it did help me learn about myself in order to establish good spending habits. All of my income and expenses were accounted for. I tentatively examined my data, noticing that I spent a lot of money at the beginning of each semester. This made sense because I would have to buy books or travel by plane from Stockholm to Edinburgh, moving to a new flat etc...

 

Looking through my spendings over the period of three years led me to see two aspects of my money spending habits which I could drastically improve. I call them the dynamic and static spending. I consider the dynamic spending to be a spontaneous event or activity  where I had zero knowledge of when it could happen. For example, illness, or a family member asks me money, or a spontaneous night out burning a hole in my pocket.

 

And the static spending where I am fully aware of an event and roughly when that would happen. For example, knowing that I must fly to Sweden for Easter.

 

These aspects made me realise that a good money spending habit is to anticipate what can happen in the future in order to better plan for it. This realisation was very crucial for me as I managed to save money for my graduation by anticipating that my whole family would come and I bought the tickets and contributed to their wellbeing during their visit for my graduation.

 

With the two requirements above, dynamics and static spendings, one can see that a solution that can satisfy them is one where you are able to predict how you will spend your money puts you in a position to forecast weekly, monthly and annual spending and assign a rough budget. But I was not really keen on attempting to anticipate a yearly budget because the unpredictability grows exponentially. Breaking a whole year down into weeks or even days makes long term saving that little bit easier.