I like to think of myself as excellent with money. I don’t have any debt and still manage to save a little each year. In reality, my relationship with money is more like a recovering bullemic’s relationship with cake ie. I can usually control myself as long as I’m not drunk. Also, I’m actually better with credit cards than with cash. With credit cards, I’m careful about what I buy because I hate the idea of owing money. But whenever I have cash, it burns a hole in my pocket. Having a wad of cash makes me feel like a rock star, ready to flash mo’ money.
Nevertheless, the simplest rule I live be is to live within my means. I don’t spend more than I earn. This is fine when you go on short holidays. But when you go on extended holidays it gets tricky. The easiest solution is to work and travel. I’ve had three Working Holiday visas (Canada, UK and Czech Republic) and this strategy worked well in Canada and UK. Unfortunately, it failed miserably when I was in the Czech Republic from mid 2006 – mid 2007.
Why? Because I did not keep track of my expenses at the time.
When I moved to Czech Republic, I had the common misconception that it was cheap because it’s Central Europe. Sure Prague’s cheaper than Paris or London but its more expensive than say, Berlin. And cost of living is high for what you earn. Beer is of course, still very cheap (and very good). The other thing about dealing with foreign currency is that it doesn’t feel “real”. And it’s much easier to spend money if you aren’t conditioned to it’s purchasing power.
In the 11 months that I was there, I only earned (in US Dollars) $4,900 and spent about $11,040. So I made a loss, for the first time in my working career, of $6,140. It wasn’t that bad considering. I worked part-time for the first half of the year and full-time for the second half. During that time, I also spent a lot of time volunteering for CouchSurfing, which was unpaid, of course. I was paying $300 a month rent for a room in a shared house, near Letna Park which I thought was reasonable. And I traveled to UK, Austria, Slovakia, Poland, Canada, Hungary, UAE, Thailand, Latvia, Greece, Germany, Malaysia. However, if I had kept better track of my expenses I would have realized that I needed to work more hours and eat out less, in order to at least break-even. I was still in the mindset that Prague is cheap and ate out almost every meal while I was there.
In the grand scheme of things, it wasn’t a big deal. But I did learn my lesson after that. Now I use an excel spreadsheet to calculate my expenses. I have a template with seperate columns for eating out, booze, accomodation, transport, luxuries, necessary supplies, etc. This allows me to see how much I’m spending in each category every month and if I need to cut back. I also have separate sheets for different currencies to avoid confusion. Lastly, I convert everything into a currency that’s more meaningful to me. I earned 98,000kc in Prague which seemed like much more that the $4,900 it really was. It sounds complicated but I only need to spend 15 minutes a week on data-entry. I’m going to tweak the template a bit more and then release into the wild. Maybe someone else will find it useful too.