The Winding Road to Financial Responsibility

I took a hard look at my finances when I decided to quit the law firm I worked at in 2016. I had one goal at the time: to save money because I expected no income for a while once I quit. Hence, major financial restructuring happened.

I have always tracked my spending, but nothing more. I recorded how much I spent, but I didn’t analyze it. Too much work for me. But then I found YNAB and it made everything easier. The app does most of the heavy job for you, but you still have to be disciplined. You must input every transaction you make to keep your budget up to date. Then you have to actually review your budget posts. Do you really need all of them or not? It took me the whole year of 2016 to start and maintain the habit.

In 2017, after having almost no income for a few months, I must admit that my saving was draining faster than I anticipated. I was more comfortable and familiar with budgeting then, and I was also armed with some knowledge on financial forecast from my years of running a business. For the first time in my life, I made a personal financial forecast. From a single sheet of paper, I could predict when I would lose all my money entirely. It helped me to decide when to look for a new job.

Now I’m entering my third year of attempting to be financially responsible. If I have to sum it up, the biggest financial takeaway from 2016 was budgeting is not scary at all. If I had done it sooner, I’d probably have a property right now. Takeaway from 2017: Uti, you always spend more than you earn. Now this, this is what makes me feel like an irresponsible adult.

I do have this money. It’s very valuable. But I don’t think I can use it to pay anything other than some fangirl love.

Analyzing my income vs expense report, in 2016 I had a deficit of 4%. Not a lot, but still a deficit. In 2017, I did earn more than I spent, but only by 1.9%. That’s hardly something to be proud of. Especially considering I had to liquidize some investment to get there. My 2018 forecast shows that I’ll have a deficit of 1.5% if I don’t find another stream of income this year. It goes without saying that I should still maintain the belt tightening as well to get that target surplus.

The second issue I’m tackling is I don’t have a financial buffer. If all goes to hell tomorrow and I find myself with no job, I wouldn’t survive the upcoming quarter. I can stay afloat for a bit further if I liquidize my investment, but it’s still not much. So now I’m working on that buffer. The first goal is to have a 4-month buffer. The next would be 12 months.

It’s hard to admit your shortcomings about money, because you fear you’ll sound like a failure. I know I do. I’m almost 30 and I’m barely making it, financially speaking. What have I been doing? I didn’t expect it would take me years to create this new financial habit and mindset. Sometimes I’m scared that I’m too late, that at this rate, I’d never be able to afford a house. I do want one.

Nevertheless, I’m starting slow. It’s liberating to know that you’re in control of your money, not the other way around. My goals are realistic: earn more than I spend and have a buffer. My roommate said I’m growing up too fast. LOL

By the way, if you want to check out YNAB, you can use my referral link. We’ll both get a month free. You won’t regret it. I wouldn’t be able to do this without YNAB.

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