Given up on Resolutions? How about trying accounting for a change?

This week’s post is by Mark Leruste, a former overweight corporate burnout turned men’s health activist, ICF professional certified coach, award winning social entrepreneur, plant-based sponsored athlete and author of “It’s Not You, It’s Me – Break up with your job and live the life you love”.

If you want to know how Mark who isn’t naturally gifted at numbers does his money management and accounting, read on…

“Accounting, that old familiar smell of spreadsheets, equations and confusion. Most of us hate it and fear it like the plague. If you’re anything like me you’re about as in control of your spending habits as a blindfolded joyriding teenager, high on his first kiss.

Deep down you know you should probably be keeping better track of how much cash you’re spending.

That’s why, for the past three years, as December comes to a close, with the help of my brother I’ve put myself through the same painful ritual: analyzing and scrutinizing my annual accounts to try and make sense of it all. And let me tell you this, looking back at what you’ve spent over a year is never a pretty sight. It’s like finding receipts in your back pocket after a big night out and realizing how much that final round cost you.

Ignorance is bliss takes a whole new meaning.

Frankly speaking, knowing how much I’ve spent over an entire year is nauseating. Especially when you realise how much you’ve spent on stuff you didn’t use or that just went to waste. It’s so tempting to turn a blind eye and ignore the whole process. But before you label me as an accounting freak, I am as financially illiterate as they come. Seriously. I’ve never liked numbers. But what I do love about doing this annual accounting exercise is that I get to make sense of the numbers. Being dyslexic, this enables me to adopt a helicopter view of what’s actually happened and make adjustments for next year. As I’m able to make a story out of the data I find.

Getting in touch with how much you’re spending on what, is something I believe you MUST do if you’re running a business or planning on launching your passion-based business in 2014.

It doesn’t matter how much you’re bringing in, if you’re haemorrhaging cash left right and centre you’ll be out of business, faster than you can say bingo.

Cash is King

For this exercise, you’ll need your bank statements over the last 12 months. Or, if like me, you’ve managed to keep track during the year by keeping tabs of what you spend on what on an Excel sheet, use your spreadsheet. You’ll then want to decide on how many different categories you’ll want to use. I use the following 10 categories and try and stick every expense in either one of them:

  • Flat
  • Food
  • Business Expenses
  • Transport
  • Books
  • Going Out
  • Eating Out
  • Gifts
  • Medical
  • Sport

By all means, make up your own categories. But what you want at the end is a clear picture (or rough estimate) of how much you’ve spent on what.

As I live in London, one of the most expensive cities in the world, it came to no surprise that my biggest expense this year was my accommodation. Representing 25% of everything I spent in 2013. But switching off the lights, turning off or turning down the heating, taking shorter showers, not running the dish washer or washing machine when half empty, or letting the water run when brushing your teeth, are small things you can do that can have a big impact over 12 months.

Last year my biggest expense was on my coaching business and represented 28.6% of my total budget. Which is a lot. However this year, my coaching business expenses fell to 2nd place representing 17% of my total budget. That’s a 40.5% drop. This doesn’t come as a surprise as when you start a business, you can expect to have to invest quite a bit in yourself and in your business. Setting up shop takes time, effort and resources.

However you shouldn’t feel bad about investing in yourself in the first couple of years of launching your business. Remember, you need to break eggs in order to make an omelette.

The good news is that as I received my ICF accredited coaching certification qualifications in 2013, 2014 will see my business expenses significantly drop. Meaning I’m looking at saving a lovely £7,000 in 2014.

Kitchen piggy bank

Food represented 5% of my total spending (£2,446) which is an improvement. I can’t stress enough the benefits of home-cooking your own lunches and bringing them into work. For both health and economical reasons. I try and cook a big batch of food on Sunday evening, and then on Wednesday. As cooking every night for the following day just isn’t sustainable.

Set yourself up for success by preparing in advance.

Blocking Books

Now, what shocked me most was just how much I spent on books. A whopping £432 on 49 books! I could justify the epic expense if I actually read the books. I’m clearly addicted to buying books and not reading them. No more books for me in 2014 then.

You can suspend your Amazon account until you’ve read through your pending book list. In my case, that would have saved me well over £400 in 2013.

Money can’t buy fitness

Here comes the real eye opener. In 2013 I spent a whopping £2,223  on health, fitness and nutrition (or £185 per month if you’re into that monthly thing). The irony is that I’m so out of shape. Clearly there’s a problem in transferring the know how into results.

As Men’s Health Jan/Feb 2014 issue reminded me:

“To really make the lifestyle changes you want in 2014- and make them stick – you need three things: a target, the knowhow to ensure you reach it, and discipline. We’re going to provide the first two. You bring in the third.”

I clearly didn’t bring the third.

What does this mean? This mean’s I’m stripping down all my expenses to just my gym membership.

Be in the know

Notice how just being aware of numbers and how much you spend on one year to the next empowers you to make sound decisions and re-adjust your budgets? Things quickly add up. Before you know it, that little, “Oh it’s just once in a while” thing becomes your fourth or firth biggest expense of the year.

This exercise allows me to wake up and smell the coffee. It helps me snap out of my state of denial and go from “Oh it’s just a book, what’s the harm in buying it?” to “Fuck me. I’ve got a real problem”.

In fact doing this exercise enabled me to get crystal clear on my New Year’s Resolutions in terms of where I want to focus my energy and hard earned cash. I’ll be sure to let you know in 12 months if things worked out!

Over to you

How much time and energy are you investing in keeping track of your spending habits? What challenges are you facing with sticking to a budget? And what New Year resolutions do you think you would make if you knew exactly how much you spent on what in 2013?

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