How to organize your money from scratch

In a nutshell

Organizing your money starts with knowing where it goes. You do not need a spreadsheet or a course. You only need to write down everything that comes in and everything that goes out for 30 days. Then you sort the numbers into three groups and pick one small goal for the next month.

The three groups

All household money fits into one of these groups:

• Money coming in: wages, pension, side jobs, child support, help from a relative.
• Fixed bills: costs that repeat every month at a similar amount, such as rent, electricity, water, internet and phone.
• Day-to-day spending: costs that change from month to month, such as groceries, bakery, transport, pharmacy and snacks.

This split shows where you can make changes. Fixed bills are hard to change quickly. Day-to-day spending changes with your choices each week.

Example

Ana and Carlos, a couple in Brazil, had never tracked anything. Together they earn R$ 4,000 a month (R$ is the Brazilian real). They decided to write down every expense for 30 days, down to the coffee.

Their fixed bills were:

• Rent: R$ 1,200
• Electricity: R$ 150
• Water: R$ 100
• Internet: R$ 100
• Phone: R$ 50

Total fixed bills: R$ 1,200 + R$ 150 + R$ 100 + R$ 100 + R$ 50 = R$ 1,600.

Their day-to-day spending was:

• Groceries: R$ 1,000
• Transport: R$ 300
• Pharmacy: R$ 150
• Snacks and food delivery: R$ 450

Total day-to-day: R$ 1,000 + R$ 300 + R$ 150 + R$ 450 = R$ 1,900.

Everything that went out: R$ 1,600 + R$ 1,900 = R$ 3,500. What was left: R$ 4,000 − R$ 3,500 = R$ 500.

The surprise was snacks. They thought they spent "about a hundred" on them. It was R$ 450. The couple's first goal was small: spend R$ 100 less on snacks the next month and set those R$ 100 aside.

Step by step

1. Today, write down what comes in each month: each wage, pension or side job, with the day it arrives.
2. List your fixed bills and the amount of the last bill for each one.
3. For 30 days, record every expense as soon as it happens. In Meu Gasto, tap Add expense, type the amount and choose the category. It takes a few seconds.
4. At the end of the 30 days, add up each group: income, fixed bills and day-to-day spending.
5. Look at day-to-day spending and mark the biggest one you did not expect.
6. Pick a small goal for that expense, such as R$ 50 or R$ 100 less next month.
7. Keep recording the next month and compare the two months.

Why only one small goal

A big goal is scary and is often dropped by the second week. A small goal is easier to meet, and meeting it makes you want to keep going. After one or two months of meeting the first goal, raise it a little or pick another expense.

Common mistakes

• Recording only big expenses. Coffee, bread and snacks add up by the end of the month. Record everything, even R$ 5.
• Giving up because you forgot a day. Forgetting happens. Add what you remember and move on; 30 nearly complete days already tell you a lot.
• Blaming yourself for what you find. The numbers are not a grade on you. They only show your starting point, and everyone starts somewhere.
• Trying to cut everything at once. Cutting many expenses at the same time is exhausting. Start with one.
• Mixing income and expenses. Record income as income and spending as spending. That keeps the "what was left" number right.