Moneywise24 Personal Finance

I remember being in Kenya in 1998. We were on Safari, and on our way to the Masaai we stopped a few times in some smaller villages to fuel up the car and get a bite to eat. Whenever we stopped, there were loads of small trader, trying to sell their good to those who made a stop-over, usually tourists. Most articles where typical souvenirs, and I spotted a small ashtray I liked, made out of pottery and painted nicely. I started talking to the man, and we engaged in a bit of small-talk. Finally, when I asked about the price, he told me he wanted 1,200 Shillings (approx. 12 Euros) for it. I thought for Kenyan standards, this was quite a lot, and I started bargaining with him just like I read in the Kenyan tourist guide. After another 15 mintues, we finally agreed on 200 Shillings (2 Euros). Now that is what I call a discount.

I nearly forgot about this experience after I got back to Europe, until one day I went with a friend of mine to buy some food for her dog recently. She took everything she wanted to the cashier, and I believe the total bill was 40 Euros. And she spoke the maginal words: “Can we bargain something off the price?” I was a bit stunned, since I had never tried this in Europe, nor have I heard from someone doing it. But the salesperson at the pet shop replied politely: “of course we can! After all, I am a trader”. Now the newly bargained price was not as low as it was in Kenya, but I believed she bought the food for 35 Euros; that is 5 Euros for one purchase… and some dogs eat a lot of food.

I tried following the same principle, and during a month I asked many different salespeopel whether he would bargain. I did receive a lot of “no’s”, but also a “yes” a couple of time. Even my favourite shop, where I buy shirts, gave me a 8 Euro discount on 2 shirts, provided I would buy two and not just one. Since I buy at least 10 shirts per year, that is a discount of 45 Euros per year. It might not seem much… but as they say, small amounts also count.

Bargaining practices might be very different according to where you live; bargaining is more common in developing countries, or those with a bargaining culture than in the western world. Bargaining is more difficult in large metropoles than in smaller towns. However, I had a lot of fun simply trying it, and additionally I now know some shops which are generally willing to bargain and I know which shops do not bargain at all.

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In the past I could have lived an easy-going month, with little financial activity, and by the end of the month I would notice 150 Dollars is missing from my budget, without really knowing what I spent it on. I could not track this amount anywhere.

I have to admit, I did not have an efficient bookkeeping system at that time, and it is one of the main reasons I implemented it. I started to track all my finances on a day-to-day basis, and what I found quite quickly is that the money which mysteriously seemed missing was in fact spent on convenience items.

As the word says, convenience items are bought out of pure convenience. It might be the quick take-away coffee you buy when you walk past Starbucks on your way to work, or the pack of chewing gum you buy because you saw it lying around while you were waiting at the cash counter. I personally also count fast-food to convenience items.

I have to admit, some convenience items are fully justified; for example, I would sometimes buy a frappuchino after work on a hot late afternoon, or somethings else to reward myself for some achievement I did on that day. In most cases, however, I found that I bought many convenience items because I was simply being lazy or reluctant to say ‘no’ to myself.

I found one trick, which has helped me the most: before I went out the door, I would get prepared. In the morning, I would make sure that I had at least two cups of coffee before I went out the door, sometimes I would even take with me a small bottle of water. Moreover I would make sure that I would not leave home with a hungry feeling, especially not when I was going shopping for groceries; doing your groceries while you’re actully hungry will result in uncontrollable shopping and thus spending more money. Additionally, each time when I shop for groceries I will make a shopping list, and rarely deviate from it. This allows me to stick to the original plan.

Surely I still spend some money on convenience items, but the total amounts has dropped from 150 Dollars to around 50 Dollars per month; a very good result.

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I have a few questions for you: Do you know your monthly net wage? Do you know how much money you spent on groceries last week? If you consolidate all of your accounts, including checking accounts, credit cards, and investments, how did your assets and liabilities develop per month during the past 6 months?  

These may seem some tricky questions perhaps, but how can you maintain a grip on your finances if you are not able to see how your finances develop over time, or if you can’t match your budget with your actual expenses? Making your finances transparent and visible is perhaps one of the first essential steps in gaining financial control.

 Doing your very personal bookkeeping means making your finances transparent. Bookkeeping does not need to be as boring as many people imagine it to be. Actually, it can be great fun, since you are actually seeing how, for example, specific changes in purchasing behaviour have a direct impact on your financial strength. Generally, Bookkeeping requires nothing more than a piece of paper (or a pre-printed book of household accounts) and a pencil. You will require separate columns for the following information: 

• Date of the transaction
• Credit amount, or the amount you received
• Debit amount, or the amount you spent
• Transaction category (e.g. groceries, real estate, living, automotive. You can define your own categories as you see fit).
• Payee
• Description / further comments

Alternatively, you can use a programme such as Microsoft Excel. Microsoft Excel offers the benefit, that you are able to set filters easily and create statistics. For example, if you would like to gain an insight on how much money you spent on automotive last month, you can set the appropriate filters and Excel will calculate this information.

If you are looking for an all-round solution, which allows you not only to do your daily bookkeeping, but also assist you in evaluating the results, you may want to consider purchasing a product such as Microsoft Money or Quicken. These programmes are specifically designed for personal finance purposes. They allow you to create multiple accounts, categories, budgets, and to enter all your transactions. In the background the programme will evaluate the data, and the programme may supply you with all the information you need.  Additionally, such programmes often allow its users to do research on companies and shares, and to plan possible future scenarios.

 The benefit of using personal finance software is tremendous; if administered regularly and precisely, you will know exactly where your money is coming from and where it is going to. Once you have your finances visible, it will allow you to make changes to how you handle money and the success over time.

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