Fixed vs Flexible

We all know that tracking how much money you spend is essential to grow your wealth.

We all started doing so with good intentions, usually failing miserably after a while.

We all tried again after a while.

And again.

And again.

The problem:

We try so hard to get it right,

that we make it too hard to keep up.

Putting every cent you spend into the right category,

so that you can see where your money goes

sounds like a great idea,

but three weeks later you have 50 categories

and no clue where to put that next entry.

The solution:

****Make it easy.

Make it dead simple.

Just write down the amounts.

That’s it.

No categories or stuff.

Just make sure you write down every cent that leaves your life.

I’ll show you my way of doing this very soon,

for now just start writing down every cent you spend.

****Actually we are going to make it a tiny bit more complicated.

Use two categories:

Fixed and Flexible

****So what’s that?

Fixed is everything that is spend automatically,

without you deciding to.

Like your rent or your morgage payment.

Or your phone bill.

Flexible is everything that you decide to spend.

Yes, refilling your car has to be done to get to work,

but you could decide at that moment just not to do it.

(If the money in your pocket was the last you’ll ever own, would you really refill your car?)

Fixed is everything that would take time to change.

You could cancel your phone, but it would take a (little) while until you’d really have to stop paying.

Flexible is everything that you could prevent right now.

(Well, don’t eat that steak first and then decide to dodge the bill.)

Create two sheets for every month:

One for fixed and one for flexible;

And put every cent that you use on one of the two sheets.

Don’t forget the standing orders ¬†and direct debits!

And try to write it down as soon as possible.

A tight feedback loop is much better than a loose one.

At the end of the month total up each sheet and see where you end up.

Do not try to keep the numbers low by saving.

Right now we are just monitoring.

I’ll let you know my stats, so you can look over my shoulder.


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