Delayed Gratification

Last month I decided to review my past expenses for the last couple of years. Ever since I decided to properly manage my finances, I have drastically lessened my expenses. After examining my past expenditure I realized I spent a lot of my income on unnecessary expenses.

Gross Total Income VS Total Expense
Although I religiously invested 10% of my income since I started working, I could have invested more that time had I resisted the temptation of purchasing those 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.

Expense Breakdown
After studying my past expenses I realized that a huge part of my income was wasted on items which I rarely used or was unnecessary. The three major expenses I incurred the past few years were my car, gadgets and entertainment.
Automobile Expenses

My car ,which was a magnet for expenses, composed the majority of my total expenses. Asides from monthly dues on my car loan, I also had to spend regularly on fuel. I had to spend for preventive maintenance, parts, 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 ride the taxi.

Gadgets. I used to regularly buy the latest phones, tablets or cameras. Even though the gadgets I usually buy are not the high end models, I usually 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.

Entertainment and Dining. 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 vacation 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 disciplined and controlled myself from spending.

After examining my past expenses I now have a new view on how to handle my expenses. Every time I get tempted to spend on unnecessary items, all I need to do is look at this graph and remind myself how I wasted my chance to accumulate wealth in the past. After reviewing my past expenditures I have learned to appreciate the practice of delayed gratification. Sacrifice today in order to have a a better tomorrow.