After attending a wealth creation seminar earlier in the year, my friend and I decided to buy a small notebook as recommended by the speakers and started tracking our expenditure. We recorded everything we bought for one week and met to go through our records.
We went through my friend's notebook first. In just one week, she had spent Sh5,000 on non-essential items. It was a bit of a relief for me as I had not reached that mark though I was not far behind.
In one of her extravagances, she had listed driving to town twice because she had forgotten some make-up cream, which she only bought from a particular beauty shop.
The fuel cost that day was Sh500 more than usual. Why didn't she jump into a matatu just to pick that small single item or listed it as 'to do' when she made her next trip to town?
She had also bought four different types of tinned jam – pineapple, orange, strawberry and mixed fruit. We went through other unnecessary items she had purchased and gave suggestions on how to cost cut.
For example, what was there a favourite flavor of jam that many members of her family liked? Then that was the one to get and those who did not love it, had to train their taste buds to accept the jam.
My expenditure, on unnecessary items, was Sh4,375. Going through it with my friend was a bit embarrassing as I had had three expensive meals at a hotel just to 'reward' myself for working so hard.
Others were different types of cereals – purportedly to give my children a variety to choose from – but the main ingredients were the same! I had also bought some four trousers, which I realised I did not like when I got home and just packed them in a corner of my wardrobe.
As we went through my expenditure, I realised we all make mistakes when it comes to wisdom in spending our income.
Taking it for granted that you are organized about your expenditure is not wise; put it down in writing and that is when you will discover that you should have put the money to better use.
From our simple friends exercise, we got these gems;
• Always draw a budget. It will guide you when you go outside this master plan. For example, if you enter 'monthly kitchen shopping' - indicate exactly what you are going to buy. Is it two or four kilos of sugar.
And here, it is crucial to track down the flow of the items in the kitchen. If you are not careful, you will discover that you are shopping for two other families who come for their sugar ration as soon as you leave for work!
How long does a 2kg sugar pack take your family? Is your duty just piling up these items without finding out that the ones you bought last month are over?
• Note down every expenditure each day and review it in the evening. By so doing, you will create financial discipline because you will be having a serious conversation with yourself such as asking yourself, "Did I have to prepare fish and chicken for dinner? Why not have fish today and chicken tomorrow?" Remember your house is not a hotel where buffet is served.
• Halt impulse buying. When you are so tempted to get something that was not budgeted for, always ask yourself, "Do I really need it? Where will I get money to replace what I will spend on this as it wasn't budgeted for?"
• Competition is unhealthy. Do not strive to be like your neighbours or friends. You do not know how they make their money, so stick to budget and work within your means.
• Save. Once you track down your changes and get some money back, save that 'rescued' money. Saving is good as it gives you an opportunity to think for the best project to which you can put the money.
In our second week of tracking our expenses, we drastically cut down the wastage; my friends was at Sh3,200 while mine was at Sh2,750.
We are progressing well and we are certain we will record acceptable levels of wastage. You too can start tracking your expenses. This is not encouraging you to be frugal, but to minimize wastage.