|Gross Total Income VS Total Expense|
Although I religiously invested 10% of my income since I started working, I could have invested more had I resisted the temptation of purchasing unnecessary items. Above is a graph showing my total income in relation to the total expenses I incurred in the last seven years. I deferred my credit card debt during those instances when my expenses exceeded my income.
My car ,which was a magnet for expenses, composed the majority of my total expenses. Asides from monthly dues on my car loan, I had to spend regularly on fuel, preventive maintenance, annual registration, and car insurance. The annual cost of comfort for having my own car was way more than what I would have spent had I opted to use public transportation.
I used to regularly buy the latest phones, tablets or cameras. Even though the gadgets I usually buy are not expensive, I often replace these gadgets a few months after. Most of the time I only use these items for a couple of months and it ends up gathering dust in my drawers.
Dining out and hanging out with friends at bars during the weekends was a huge part of my expenses. I also regularly spend my summer on beach resorts or at the province. I never realized how much of my income was wasted on these splurges. Even though I usually dined at affordable restaurants, the accumulation of those small expenses turned out to be a huge amount. It was only when I summed up all these small spending that I saw the big picture.
|Projection of Expense invested in stocks|
If I had only controlled my expenses before my investment portfolio would have looked a whole lot different. In order to reflect on my mistake, I made a hypothetical graph of what my investment would look like if I invested all of my expenses on equities. I was surprised to see how far my money would have gone if only I had the discipline to control myself from spending.
After examining my past expenses I now have a new view on how to handle my expenses. Every time I am tempted to spend on unnecessary items, I just look at this graph and remind myself how I wasted my chance to accumulate wealth in the past. This experience has taught me to appreciate the practice of delayed gratification. Sacrifice today in order to have a a better tomorrow.