How I save more than 50% every month, increasing my assets

Hello everyone,

this will be a short article about how I manage my finances, and how I track them every single month for having always a positive impact on my management.

This article is just my opinion and it is not meant to give advice on how to invest or how to manage your savings every month, but it could give you some interesting insights into your lifestyle.

The Mindset

So, before going into details, I want to tell you something about the mindset. You can have all the tools for managing/monitoring your expenses/income/investment, but if you don’t have a mindset, it will all be useless. You will always have difficulty managing your finances.

First of all, what is the movement that I follow? It’s called F.I.R.E.

What is it?

F.I.R.E. stands for “Financial Independence, Retire Early.” The goal is to save and invest aggressively — somewhere between 50–75% of your income — so you can retire sometime in your 30s or 40s (https://www.ramseysolutions.com/retirement/what-is-the-fire-movement#:~:text=So%2C%20What%20Is%20the%20F.I.R.E.,in%20your%2030s%20or%2040s)

Therefore, I feel I belong to this movement because I have well-defined goals for the next 20–30 years. As described in the article, this mindset isn’t for everyone, so that doesn’t mean you have to manage finances in this “aggressive” way.

I’ll show later how I actually manage my finances, but the first thing you need to define with yourself is where you want to go from here to the next 20 years. Where do you want to be, and how do you want to get there?

Indeed, if you read articles about the F.I.R.E. movement you’ll read some “basic” rules you must set up, like:

1. Start dreaming and planning for retirement.

2. Find ways to keep your expenses low.

3. Look for ways to boost your income.

4. Make saving and investing a priority

These are the basic rules for getting a good mindset about money. You don’t need to join this movement for managing in a good way your finances, but this could be a good starting point.

So my basis is having an aggressive saving policy + and aggressive monitoring of my expenses — every single month. You need to think about your finances like a company: you should build a budget for your next month, % of expenses, and savings.

One of the most important rules for me is trying to not have debts. They erode your assets, so try to have fewer debts as possible.

Excel

First of all, I’m a BIG FAN of Excel.

I think you must manage your personal finances on Excel for multiple reasons:

1. You can create whatever you want for monitoring expenses and incomes
2. You can connect it to other apps, so you can have a bigger vision of it
3. It’s so useful, that’s it

So, how do I do it?

Let me show you.

I divide every single month in every single excel sheet. How Is it composed inside?

Let me explain here:

1. First of all, I have divided all the expenses into categories, like transportation, house, entertainment, loans, etc
2. For every category, I have 3 columns:

• Expected cost: this is the forecast for the month for every single expense. I do this at the beginning of every month. This will be so useful for your management.
• Effective cost: the real cost, and it is compared for each category.
• Difference: this is the difference between the Expected cost and the effective cost. If it’s negative, this means you have spent more than expected, otherwise you have respected the budget.

3. The same concept of point 2 for your income. This is placed at the top left. You have projected income and effective income. While at the top right of the file you have the balance (expected income — expected expenses & effective income — effective expenses), with a final difference.

This is pretty simple, and trust me: if you write down your expenses and income, you will be more interested in respecting the forecast.

Then, I put all the important numbers into a new sheet, where I have some graphs. For example:

This is a very useful graph.

• Red line: my total expenses every month
• Orange line: incomes (there is 0 in month 12 because we’re still in Nov)
• Green line: my savings
• Blu line: Company bank account

From this graph, I can easily understand what I did during the last few months, and how I can improve.

How much % do I save every month? More or less 60%.

Another important point is the average of your expenses month by month. I try to spend less than €850/m (this does not include investments/savings, because they are not expenses). Why 850 and not 900, or 1000? Because I saw this is the average of my past 12 months.

Also, I didn’t show here my graphs for the investments side, I can show them in another article.

This article was for showing you how I manage my finance day by day.

Opinions?

You can reach me here: https://twitter.com/DG_9_6