Kristy Shen knows how to save money.
Shen, who runs the blog Millennial Revolution and who retired at age 31 with $US1 million in the bank, says many people are making the same mistake when it comes to spending their money: They aren’t keeping track of where it goes.
“I feel like people are not tracking the money,” Shen told host Farnoosh Torabi on the podcast So Money. “And it’s not because people they don’t know what they’re doing, or they’re dumb, or anything like that. It’s just — people are not tracking it. They don’t know where it’s going. At least that’s what I found with a lot of my friends.”
In fact, Shen considers not tracking your spending to be “the biggest financial mistake someone can make.”
Here’s Shen, who, like her husband, worked as a computer engineer:
“Some friends who … made more money than us while working, they’re looking at us and going, ‘How come you’re financially independent? How come I don’t have money? Where did my money go? I worked longer than you and I got paid more.'”
Her travels around the world costs her and her husband, Bryce, about $US40,000 a year, and she credits tracking her money with being able to stick to that budget. While she recommends the strategy, she admitted, “I know it’s a pain in the a–.”
“Even if you blow the budget once or twice, it’s not a big deal. Everybody makes mistakes. I made mistakes, too. Being able to track it allows you to see, ‘Hey, look! I’m going in the wrong direction. It’s not going towards my financial goal,’ so then you just move back towards the right path and then you’re good to go. I think tracking is absolutely paramount. That’s one of the things that would help people a lot financially.”
If you’re looking for a little more control over the process, you can create your own spreadsheet. For templates, check out how one Business Insider editor tracks her money, or how a man who retired at 34 tracked his.