Spending months going through countless job application processes without results can become disheartening. I decided to do what I could to remain upbeat, and to try to make the most of the time off work by forming some good habits that would hopefully stand me in good stead once I re-entered the workforce. Since finances were a concern, there was no more suitable time for me to begin getting a handle on my expenses. First step – to start tracking expenses:
1. Tracking my expenses:
This is possibly the most important routine that I formed while unemployed, and I intend to keep up the habit now that I am working again! I have lost track of the number of blog posts I have read which told me that that tracking my expenses and understanding where my money is going is a first and essential step towards financial independence. Yet, for some time I had resisted this. Since the beginning of 2017 though I have been saving my receipts in a in a chocolate box. Finally, some time in April I sat down one evening with my laptop and my box of receipts and began logging them all on a spreadsheet, month-by-month. I continue to collect my receipts, and sit down regularly to log them all into a spreadsheet, along with all debits from my online bank statement. Over the months I tweaked the data until I got it into a visual pie chart which gives me a high-level overview of my monthly expenses. I would recommend this as a good exercise for anyone, if only to enable them to answer questions like a) how much do you spend per month on groceries, electricity, etc.? Below is my little pie chart reflecting my June expenses.
Overview of June expenses:
I have been living frugally, since I am coming out of the longest period of unemployment of my life. For this reason, discretionary expenses such as entertainment are at a minimum. Vet bills involved necessary vaccinations in order to keep a new pet healthy!
Tracking expenses heightens awareness, and influences behaviour. (“That which gets measured gets managed” etc.). For me the process of increased awareness and resulting changes in behaviour had already been developing slowly over the past year, since I randomly stumbled upon the FIRE community and began to realise the amount of waste involved in our first world consumerist lifestyles. Since for me the process of becoming aware had already begun, some behaviour modifications had also already begun to creep in. Tracking expenses crystallised this awareness for me. Ultimately, I would have to agree that we cannot know how much we need to live on unless we understand exactly what our annual expenses are! Doing this at a time when I had eliminated pretty much all discretionary spending was a bonus in that it showed my costs at a fairly basic level – how much it costs per month just to keep the show on the road, and even if I never buy anything other than the bare essentials (groceries, power, insurance). This led me to make other positive changes as well, such as shopping around for a cheaper energy supplier, and getting a better deal from my existing mobile phone company, leading to reducing my expenses by €850. (For more information on this see this blog post – https://wordpress.com/post/financialindependenceireland.wordpress.com/9). Ultimately, although a little frightening at first, this process is eventually empowering, because there is no longer a “great unknown”, and, armed with the raw data, we can make decisions about things we would like to change (or not). In addition to shopping around for the best deals on utility and health insurance, I began to cook more and eat out less (more on this under point 2. below). Most importantly, I realised that I could significantly reduce my expenses by renting out a room in my home!
Having made a number of positive changes, I will continue to track expenses to keep an eye on them, at least until the end of this year, but hopefully on an ongoing basis. As a next step, I am now shifting my focus to tracking my net worth!
2. Meal planning/ Cooking more, eating out less:
Tracking expenses also led me to the realisation that I had been spending an average of €10 per day on food and coffee while working. Using this conservative estimate I was spending €50 per week, or a whopping €2,400 per year just on food and coffee during the workday! (Calculation based on a 48 week year, since I had about 4 weeks’ holiday per year). Some days I was so disorganised, that I would buy breakfast on the way to work, or forgo breakfast altogether if I was running late and didn’t have enough time to go to the shop. Additionally, I would buy 1 or 2 lattes per day at a cost of €2.85 each (later increased to €3, because according to the shop owner, the extra 15c would not make any difference to people – I beg to differ – I could probably buy a new pair of shoes each year with the difference! ). Then of course there was lunch, usually about €6.
Now my routine is very different. Since starting at the new job I have been bringing lunch with me. I cook at night and make enough for lunch the following day. I hindsight I realise that it is much more relaxing to actually know that I have my lunch with me, and not to have to spend half of my lunch break walking/ queuing for something to eat, not to mention the fact that I spent most of my working life eating white bread rolls which did nothing for me health wise! Add to that the fact that the company where I now work has a large, fully equipped lunch room, means that lunches are more relaxed, healthier and much less expensive. I even find time to take a walk and get some fresh air before going back to my desk. As for breakfast, I leave a big bag of muesli at the office, and start my day with getting in a bit early and having a coffee and muesli at work. I have now done 2 whole months at my new job, and with the exception of my first day, I have not spent any money on food or coffee during my working day. Other than the obvious cost saving, I am also saving time, and am eating healthier.
3. Getting regular exercise:
I had been walking regularly for most of the period I was unemployed. I then decided to up my game by joining the gym for a month, availing of a 1 month special offer available to the unemployed. Around the same time that I got my job offer, the gym had a special offer for the remainder of the year for about the price of 2 doctor’s visits, so I joined up! My routine now is to pack a gym bag 2 days a week, and go to a fitness class after work, and I try to go once at the week end too. I try to look at this as as much a part of my routine as going to work. I’ll allow myself some choice in which days I go, but I try to make sure it is 2 days during the work week. At first my only goal was to make it to the classes and participate to be best of my ability. Over the 2 months that I have been doing this I find that my flexibility has improved, and that I have more stamina. The classes are becoming less of a big deal to me as my fitness level improves.
All-in-all, the fact that it took 8 months to secure my new job forced me to adopt more frugal routines. Going through 1st, 2nd and even 3rd round job interviews, and sometimes not even hearing back was a humbling experience, to say the least. The result of this is that these days I take nothing for granted, and actually appreciate having a job! I feel like the routines that I adopted while unemployed are benefitting me greatly now that I am back in work. My health and my finances were both aspects of my life that I had ignored until now. In all, I have found that these routines put structure on my life, and I tend to organise my time better, knowing that I will be leaving the office to go to a gym class, or that I will be getting myself in there bright and early to have my breakfast and hit the ground running. Financially, I have stopped burying my head in the sand, and to my amazement have found that, through my new awareness, and with just a small amount of planning, I have eliminated quite a bit of waste, which has translated to more money in the bank at the end of the month, with no sense of sacrifice!
Next up – the interesting bit – how will I choose to invest the savings…