indi + rani = noe | kei

I think the sayings "What gets measured, gets managed" is quite true....

Tracking our expenses and transactions

We have been quite rigorous in tracking our expenses and transactions since the first years of our marriage. We log our expenses up to the cents.

Right after we got married, we were quite carefree about spending our money, particularly for dining out and entertaining people. Then we realized that we couldn't account of the spending: it seemed that our money just vaporized into thin air, and the savings didn't grow as much as we wanted it to be. "It couldn't be!" I thought, "Where did the money go?" Realizing that something needed to be done about it, at the beginning, it was just me who took note of the expenses. But then I persuaded Indi about the benefit of doing so and he was willing to give it a try. After doing it for a few months, Indi too realized the great benefit of tracking. Now it has become a habit for both of us.

We didn't just stop at tracking our expenses. Once a week, I took the duty of consolidating all the expenses into spreadsheet, classifying the expenses into different categories. Once a month, both of us review our income and expenses. It rings true enough, "what gets measured, gets managed". The following are the benefits of tracking expenses:

• We know where our money goes. Never again it disappears into thin air. This information is very useful. For example, it is often a surprise to know how much we have spent for small things over one year or more. Let's say, small purchase of disposable diapers since 2005 until now has depleted our cash by more than 1,000 SGD, and even that, we were using one of the cheapest brands available. Plus the baby wipes, diaper rash cream, etc it may have been close to 1,500 SGD! This is called "The Latte Factor" which is small purchases that count to be a huge expense over time. Thanks to the detailed expenses log that we have, we knew about this and are able to take action (No more Starbucks!). Oh, and about the diaper, we're currently planning to move to cloth diapering and elimination communication to save cost, but that would be a totally different blog post.
• The tracking helps us to approximate the expenses for the next month, projecting savings, or to set out budget.
• The tracking tells us how we could take actions to cut cost, hence save more money. For example, taking a taxi could stretch our expenses to a couple of hundred dollars. Since it is reflected in the spreadsheet, we knew that we need to take bus and walk more.
• It becomes an interesting record of our spending pattern too!

And it didn't stop at having a massive record of expenses. Those spreadsheets are useless unless we take action on it. At first, we only took note of the expenses. The next step we knew which corner to cut. Furthermore, we began to set out monthly budget for the expenses. Finally now, we set savings target that we need to fulfil every month and cut the money for saving, first thing in the morning when the paycheck come (Think about the boat, the boat, the boat!).

It worked for us so we'd like to recommend that everyone do it. And it's not difficult at all, you'd only need a tiny notepad and pen in your pocket / handbag all the time and jot down the expenses as soon as it happens to you. Or, like Indi, who uses the pda that could sync the data with the computer easily. Or, like me, I use twitter and sometimes notepad (my pda sucks). It takes us only 5 seconds at the most, after each purchase.

Tracking my time

Having been used to tracking the expenses, these past couple of months I have been doing the experiment of tracking the time I spent doing things, to the details of five minutes. I realized that I needed to do this, in order to accurately allocate time for doing personal projects or do freelance work. Indi thinks I'm crazy of doing this, but I have my reason. Since Indi is an employee working 8 to 5, he is able to segregate time for his work and time for other things. As I am a full-time mother and part-time anything else, my time allocation is jumbled and mixed.

Before we have kids, I used to be able to focus on doing things for more than three hours straight, even without eating and drinking. Since I'm primarily an at-home-mother (and note, I hate that dicothomy of SAHM vs WM), I am often interrupted by the little ones. Now, I could rarely focus on doing things for more than two hours, which used to be the optimum way for me to be productive. Surely, I needed to change the way I work. But how? Again, "What gets measured, gets managed". The first step is to know how much time I spend doing things, of course.

Everyday, I track the time I take for doing things, primarily using pda-twitter and also using small notepad. Each tracking took me 5-10 seconds, and each day, on average, there are 16-18 different activities. So it doesn't take much of my time to track it. Once a week, I would consolidate the time spent into a spreadsheet and classifying it according to several categories (30 minutes per week). Once a month, I review them and this should allow me to decide what actions to be taken (30 minutes).

I found these interesting facts from two month of logs, one prior to Kei's birth, and one after:

• Before Kei's birth, I spent about 9 hours perday of family time and household. After Kei's birth, I spent about 15 hours perday for this (including more time dedicated for breastfeeding, and taking care two kids). This is given, can't be reduced, as my kids and family are my priority. However, I should consider ways to make household work more efficient and timesaving.
• Before Kei's birth, I spent 3 hours perday to do useless things on the web like facebooking, friendster, flickr, and blogwalking. After Kei's birth, it became 2 hours. This should be reduced even more: 1 hour per day at the maximum. Make it 30 minutes.
• On the other hand, on average, I spent only 1 hour perday replying important emails, 1 hour perday doing volunteer work, 1 hour spending time with friends, and 15 minutes perday writing blog or get involved in wikipedia. These should be increased.
• On average, I sleep 7.5 hours perday. This should be reduced. I use to be able to sleep 6 hours perday only.
• On average, I spent 1 hour perday traveling or in transport mode. This should be reduced by planning travel more efficiently.
• Before Kei's birth, I have 6.5 hours to do work (personal projects or freelance thingy). After Kei's birth, it became only 3 hours. This should be increased. I am targetting 4-5 hours perday should be available to do work.

Having logged my time in details enables me to decide what activities should I do less (aimlessly web-browsing), what activities should be made more efficient (household work), and what activities should be increased (spending time with kids, work, volunteer, romancing with Indi). How? Maybe I would try to elaborate more on this in the next blog post (depending on my time).