Hi,

Today I'd like to touch on a sensitive topic for everyone – the household financial report. I have a feeling it's somewhat taboo in Poland. We don't like to talk about finances, financial problems, or our investments. Whether that's good or bad isn't for me to judge; in my opinion, it's a personal matter.

However, I am disappointed that schools do not prepare students from an early age on how to manage their budget, and I know from my own experience how much this helps.

No one taught me this either. I only became interested in this topic after university, when I graduated with an engineering degree and was "released into the world." Even though I had this degree, the system received me rather coldly when it came to job offers. Everyone wanted an experienced employee, but where would they get that experience? But that's not what we're talking about today. My point is that everyone at this stage doesn't have a fortune in today's world, so maybe it's worth considering planning and controlling your expenses? Besides, this isn't just for graduates. It works really well for people of all ages.

I don't know if you're aware of this, but the main reason Poles are seriously indebted is the so-called debt spiral. This means that someone takes out a loan (or worse, a payday loan) without knowing if they can afford it. And then, when it comes time to repay the first installment, they take out another one to cover the first installment. And so on, and so forth. It's a HORRIBLE situation, and certainly no one wants to find themselves in it.

With a financial report, you know down to the penny what you can afford and what you need to wait for without risking falling into this trap.

Advantages and disadvantages of financial statements

Let me start with the drawbacks. The only drawback I see in keeping your own financial statements is that you have to regularly enter your financial information (not just expenses, but also income). I mean, you don't really have to, but if this statement is going to be based on hard numbers, you have to provide hard numbers (because that's the point, right?) ☺️

What about the advantages? Let's see:

1. Complete financial awareness, meaning you know exactly how much money is going into your pocket. You also know exactly how much is being withdrawn, which means you also know how much you can save each month. This isn't some fortune-telling exercise, but concrete data. You gain a clear picture of your situation, allowing you to make informed decisions. How many times have you wondered where your paycheck went? With a household report, that problem disappears.

2. You can plan the exact amount of savings you want to allocate a given amount of money for (e.g., a car, a vacation, a new phone, or a computer). I call these "pockets." This makes saving tangible and less abstract. You see how your small steps add up to something bigger, which is very motivating. You're not saving "for nothing," but for a specific goal you have in mind.

3. You'll easily identify unnecessary expenses. You might notice that you're wasting more money on certain expenses than you expected (coffee out, impulse buys, subscriptions you don't use). This allows you to change certain habits and save money that you can spend on other things. It's like a magnifying glass revealing all those "holes" in your budget you weren't even aware of. Suddenly, it turns out that that daily coffee is a significant monthly expense that you can redirect towards your dream goal.

4. Effective planning and budgeting, my favorite part. By creating the "pockets" I mentioned earlier, you can see how far you still need to reach a specific goal. You can realistically estimate when you'll achieve it. It's a bit like asking a passerby for directions—"Wow, that's a long way off." And when you open a map, you see exactly how far. In this case, the financial report is your map. This awareness allows you not only to dream, but also to plan and act realistically.

5. Reducing financial stress – I don't know about you, but this is crucial for me. Everyone likes a sense of financial stability. I particularly value it. Having hard numbers means you know exactly where you stand. Most people only know the total amount in their bank account. Unfortunately, when it comes to real budgeting, that's not enough. No more nervous checking of accounts at the end of the month or worrying about unexpected expenses. You have control, and that gives you peace of mind.

6. Prepare for unexpected expenses – By analyzing your expenses, you can spot seasonal trends or anticipate larger expenses (e.g., car insurance, vacations, Christmas gifts). This allows you to build an emergency fund and prepare for unforeseen situations, minimizing the risk of falling into debt. Life is full of surprises, and having a financial cushion guarantees security and freedom of action.

7. Financial problems or difficulty planning personal or shared finances are very often the cause of relationship breakdowns and divorces. With reliable financial reporting, this risk is eliminated. For example, in my family, I maintain the financial statements, but I regularly show them to my wife. And we make decisions together. Financial transparency in a relationship builds trust and helps avoid many misunderstandings. Money ceases to be a bone of contention and becomes a tool for building a future together.

So as you can see, there are quite a few advantages.

Okay, if you agree with me that financial statements aren't such a bad idea, you're probably wondering now – what should such a statement look like? And how should it be prepared?

There are several methods. The simplest method is an Excel file, but I wouldn't recommend it. Why? To maintain an Excel file, you must:

- Start the computer
- Wait for the system to load
- Run the file with the error
- Enter the data
- Save the file
- Turn off the computer

If, for example, you complete an assignment every 1-2 days like I do, these activities can be quite annoying.

So if not Excel, then what?

I personally recommend Google Sheets. Why?

You can update your file from your phone; all you need is a Google account. This is a huge advantage, as it allows you to keep track of your expenses, even while waiting in line at the store or riding public transportation. It's quick, convenient, and hassle-free.

Google Sheets is very similar in appearance to Excel. It also contains many Excel formulas, with some differing only in name. If you've ever used Excel, the transition will be a piece of cake.

It's free. Yes, you read that right – an advanced financial management tool that costs you nothing!

If necessary, you can perform much more advanced calculations than in Excel. Its capabilities are truly extensive, yet it remains intuitive to use. You can create complex charts, analyses, and even automate certain processes if you're willing to delve deeper into its features.

Of course, there are programs for this type of operation. I don't know them personally and haven't used them, so I can't recommend them. But if you use such a program and it works for you, then great! That's the point. My goal here isn't to convince you to use Google Sheets, but to make you aware of the value of managing your budget and your family's. If you approach this topic honestly, you're at the forefront and you'll surely appreciate its value.

In the next article, I'll show you how to create such a spreadsheet in Google Sheets, step by step, which will likely evolve over time to suit your preferences. And even if math isn't your strong suit, don't worry—it all comes down to addition and subtraction. Just like in a store.

Remember that taking control of your finances isn't a one-time action for a week or a month, but something you do continuously. It requires consistency and patience, but the reward of peace of mind and the ability to plan and achieve your goals is priceless. Start small, make it a habit, and you'll see how much it changes in your life. I've been doing mine for 15 years, and I don't plan on stopping ☺️