Photo: Jeremy Paige

The Elusive Money Tree

I have recently developed an addiction to online shopping. Unfortunately, I have not opted for the ease of websites like ASOS or eBay. Instead, I am forced to use a specific browser (Chrome), have two Google searches open at all times (“yuan to aud” and Chinese > English translation), and use ridiculous apps like Ali WangWang and WeChat to communicate with sellers. Approximately five years ago, I discovered a website called Taobao. It is only now that I have begun using it.

Ordering items off Taobao has shown me how amazing e-Commerce really is. It has been the perfect experiment in globalisation, being able to communicate with sellers from many kilometres away and (usually) receive better customer service than what I’d find at the stores 3 kilometres from my home. However, one thing that this online shopping addiction has taught me is how easy it is to uncontrollably spend. You watch your financial control wither away. Each new product you find leads you further down the rabbit hole. You tell yourself you have to have it. You research different sellers with comparable goods that you hope will stock your size (the issue with having size 42 feet!). By the time you realise, you have wasted 4 hours of your time with your eyes glued to one webpage.

After my recent order that involved going to extreme lengths to get what I wanted (using a Chinese agent to ship one particular item to Australia that I just had to have and could not obtain any other way), I decided to ban myself from any future orders, at least until I figured out how much I was truly spending and the motivations behind my purchases. I set off to construct a budget spreadsheet in Excel. This is not the first time I have made budgeting spreadsheets, but it was the first time I tried to simplify the process. I have never been fond of budgeting apps because I have never been overly committed to them. Like some people, I see my bank statement as being a good enough tracker of my day-to-day spending, and would rather assess such records in my spare time to identify any patterns. Truthfully, my spending patterns are not complex. Every month, I spend money on petrol, food, my phone bill, my gym membership and my trauma insurance policy. This time around, I was more interested in analysing those other incidental costs that come up, like spending $60 on Easter eggs….

I split my budget up into the following categories:

  • Fixed expenses: This includes things that you are routinely charged on a consistent basis, or things you purchase that are almost always the same price (e.g., I spend $60 per week on fuel, qualifying that purchase for this category).
  • Meaningful savings: I consider all my surplus cash flow to be meaningful savings as I am not planning on going on a holiday anytime soon, and will not be reliant on my savings if I need to sell my car and purchase another one. This can also include savings for big purchases that you may have during a given time period, like car insurance or registration.
  • Short-term savings: I have decided to use this section to categorise purchases that I know I make every few months, but would not consider a meaningful saving or a general incidental cost. This includes birthdays, festive seasonal holidays (so you are not bankrupted by Christmas!) and seasonal clothing hauls for new work clothes (or anything else I feel like purchasing). And lastly,
  • Spending money: These are your normal, day-to-day obligations like food, regular medication purchases, etc.

After plotting out all my spending, I equated each payment to monthly and annual amounts. I then looked at my monthly take-home pay and compared this with my monthly spend. Luckily for me, I am operating in a budget surplus (I think Tesla wishes they could say the same at present!). However, I can see exactly where my money is going, and can reallocate funds to different areas if need be.

Something I learned recently from a financial adviser by the name of Shannon Lee Simmons is that we should avoid cutting costs from areas of our life that bring us the most joy. For me, this would be food. Although I don’t eat out as much as other people may, it is still a relatively frequent exercise for me. In the event of budget stress, I could follow Shannon’s strategy by looking at my budget, cutting costs from other areas that may not be as vital, and directing funds to my food allowance instead. This is not permission to go crazy and spend all your income on the one thing that makes you happiest (especially if it is a destructive activity), but it does reduce the amount of guilt that some people feel when they spend money on things they actually enjoy.

I see budgeting as being a delicate balancing act. One one hand, you should have a clear idea in your mind of what you are saving for. My boss always says “if you don’t know where you’re going, any path will lead you there”, and this is especially true for saving and spending. If you have no clear goal in mind, you will spend money on anything and everything. If your goal is to live a frugal life, invest and retire early, good for you - budget accordingly. If your goal is to save up for a holiday and blow a lot of cash while you are overseas, that is fine too. On the other hand, you should (if you can) allow yourself a little bit of wiggle room to have an indulgent dinner at a nice restaurant every so often, or to purchase something that you have wanted for a long time. We all have different desires, different goals, and are driven by different things. Hence, the things we spend money on will all satisfy us in different ways. However, if you want to feel less lost, taking some time to understand where your hard-earned cash is flying off to is one way to find yourself.



Categorized under: Secret shames