Intuiting your own ships ledger, or what normal people call a budget, is the only fireproof way to ensure you are keeping track of your own assets and finances. I keep a very robust record. This record is than updated on the 1st of every month. This record keeps me on track with my current finance goal, aiming for the overall goal of financial independence (see My FI Goals).
Now with this being a more intermediate blog, I won’t bore you with what a budget is. I will tell you how I keep mine. Also why I believe counting every outgoing cent is actually bad for you.
My Personal Ledger/Budget
I believe a budget is important, but it is also not the be all and end all for accumulating wealth. Basically, I ensure I know how much I am spending on Netflix, as when you also add Stan, HBO and Hulu it starts to really eat away at monthly take-home pay.
I don’t worry about the beer I bought at the local tavern and you wont find it included in my budget. It’s the constant subscriptions, insurance costs, housing and such, I do. This allows me to quickly look at my largest expense percentage and try and reduce it. I only want to spend my time on the big fish, as time is precious.
Just as the sailors used paper ledgers and charts in old times to reach their destination, I still use and only like the old relabile excel spreadsheet. This gives me complete flexibility on how I want to design and track my finances.
As you can see from my snippet, I track everything that is a constant expense. These figures usually come from the previous year’s expense if I don’t know or can’t accurately forecast this year’s expense. Income is what I take home.
I prefer to work fortnightly for budgeting; due to my pay cycle. You can see how I have broken down each expense into weekly, fortnightly, monthly and annual. This allows me to input an annual expense into my budget and it will tell me how much it costs per fortnight. The furthest column is the most important. This tells me how much of my expense is for each category expressed as a percentage.
This allows me to ensure I am keeping my transport budget below what I feel are acceptable. While also letting me know what my largest outgoing is.
At the very end of the page is what is left over. This leftover is whatever us as a family want to spend it on.
The Small Stuff?
Why don’t I count every single expense in my budget? Simply because it’s way too much work to ensure that 1. I am keeping track and ensuring I don’t overspend in that criteria and 2. It can be really depressing to allocate how much I can spend each month, and not allow spontaneous or flexibility in my life.
Life is unpredictable, and you need to allow flex in every aspect of life. I would rather blow off steam in port visits between the high winds and waves, the battling through turbulent seas or succumb to poor weather, then do all three without the enjoyment of my wealth, even if my voyage takes longer to reach.
In short: Ensure everything is accounted for by making a Ship’s Ledger.