Can I get anything useful out of my savings history?
June 30, 2011 4:42 AM   Subscribe

As a result of my method for saving money, I've ended up with a huge excel spreadsheet for the last 4 years detailing how much I've put in and taken out of my savings account. The problem is that although I've taken time to record all this information, I've now realised that I'm not sure what I can actually do with it. Do you have any ideas?

For that last 7 years or so my method for saving money has been simple. At the beginning of each month (after I've been paid) I allocate myself a set amount of money and anything that I have above that gets put into a savings account.

In the last 4 years, I've maintained a spreadsheet which details every month how much money I've put into the savings account, how much money I've removed, the running total (including interest) and some commentary about why the money was removed. In the past three years it's been for things like a new kitchen, a new bathroom and new windows. Not only that, but I've also transferred money out into other (higher interest) saving products such as ISAs and NS&I Saving Bonds. So I'm not actually tracking the value of all my savings, just the amount of money in my instant access savings account.

So now I'm sitting on a 48 lines worth of data, two pretty graphs (one tracking the rise and fall of the savings and one showing the amounts added on a monthly basis) and absolutely no idea whether or not this information is useful or usable in any way. There are no patterns or consistencies in either of the charts - so to be honest it just looks like a big old jumble of numbers.

Is there anything I can actually do with this data which would be remotely meaningful or useful?
posted by mr_silver to Work & Money (12 answers total) 2 users marked this as a favorite
If it was categorised, you could see whether your spending in certain categories went up or down, e.g. you went to the cinema/out twice as much as last year. Why? Why did your utilities bills double?
posted by devnull at 5:05 AM on June 30, 2011

There are various things that can be done with it - as devnull said, I would try to categorize it as much as possible to see how much of it was actually needed i.e. new windows vs. wants i.e. upgrades to a new car.

I personally was like you at one point, and just got sick of it. Many banks now are also offering online web banking that automatically categorizes the purchases for you. I use Quicken Personal just because of my own personal financial situation, and it gives me more power to do what I want including financial forecasting.

The other thing that can be done is run the numbers, and try to forecast your financial situation over the next few years. Are you anticipating any major purchases or is there one time a year that seems to take alot more money then another? If not, I would seriously look into reinvesting the funds either into a Roth IRA or 401K (if available); saving accounts have extremely low rates of return and by investing, you are helping to secure both your retirement and most likely, have a better return then just by sitting in a savings account alone.

In regards to your original question, there is really nothing that can be done besides categorizing the spending and trying to trim down the spending on neccessities. I would forecast and reinvest the money if I have at least a 6 month emergency fund stash. Savings accounts right now are not the way to go since most are returning at 1, maybe 2 percent. Make sure your emergency fund is set up, your other financial priorities can be taken care of (do you need a new roof, deck, etc.?) and reinvest the money if possible into an investment account.
posted by lpcxa0 at 5:19 AM on June 30, 2011

Turn it in to a work of art.
posted by Obscure Reference at 5:28 AM on June 30, 2011 [1 favorite]

Look for patterns in spending or savings that correspond with other things going on in your life, and use that knowledge to reduce future spending and/or increase future saving.

For example, my spending on crappy fast food increases during certain times of the year, corresponding with busy stressful times at work. Armed with that knowledge, I could do some extra cooking now, during times of little stress, to load my freezer with cheaper, healthier options.

But really, the PROCESS of recording this information is probably what's really valuable, rather than the actual numbers. By forcing yourself to record everything, you may subconsciously have been spending less, or spending on only important items, or just in general being more mindful of spending. This is the same idea that Weight Watchers and other calorie-counting programs use for motivation. If you know you're gonna have to record that impulse ATM withdrawal of $20 here or $20 there, you might be less inclined to actually do it.
posted by SuperSquirrel at 5:37 AM on June 30, 2011 [3 favorites]

As a general point, it is interesting to realise that not all data is valuable.
posted by DarlingBri at 5:41 AM on June 30, 2011 [7 favorites]

My bank allows me to download a .csv file of every transaction that has occured that I can import into excel. That seems to be what you have been manually updating. of your SAVINGS account.

You would be better off keeping a record of your day to day expenditure to see what you are actually spending money on / where you could 'trim'.
posted by mary8nne at 6:12 AM on June 30, 2011

I had a similar experience recently with tracking my time use -- coded every fifteen minutes for over a year, hardly ever used it. The key is to be able to search and manipulate the data. For example, I use Microsoft Money 98 for recording finances, and I can tell you stuff like
  • what percent of my total income is overtime pay
  • how many pairs of socks I buy every year
  • the exact dates I was in Las Vegas
  • whether my net worth has ever gone up as much in a month as it did last September
  • which months I work the most overtime, and the least. How many hours of overtime I work a week on average.
  • that my food costs went up 50% over three years and then slipped back a little (don't know why that one is, I just discovered it while writing this post. I'll have to break the chart down into "dining out", "TV dinners," and "groceries" to see what went up.)
It's the searching by payee or category and the ability to make bar, line, and pie charts displaying the data that makes collecting it worthwhile. Unfortunately Microsoft is not going to be making Money any more, but as long as I still have it it's going to be the best self-tracking software I own.
posted by Noumenon at 6:16 AM on June 30, 2011

It would only be useful if you have a financial goal. If you were saving up for something big, you can track how well you are doing and estimate when you can achieve it. Also you can remove items that you don't need to see what kind of sacrifices can be made to achieve your goal faster.
posted by gttommy at 6:47 AM on June 30, 2011

Thanks for all the answers so far. There is only one entry per month which summarises the total in and out for that month (for the savings account only) so it would be impossible to categorise it. In addition, I've only taken money out of the savings account for big essentials and nothing which you could class as frivolous - even the new TV didn't come out of that!

My gut feel when I looked at this data recently was that although I had 4 years worth of data, it was too vague to be useful for anything.
posted by mr_silver at 7:35 AM on June 30, 2011

As a general point, it is interesting to realise that not all data is valuable.

Totally great point, though I'm not certain that this data meets that test.

I've done the same thing, but I categorize things along the way, both into basic budget categories (Home, Life, Transport, Savings, Debt*) and many subcategories. This totally helps me create budgets and adjust spending. I can't imagine doing things any other way.

It's easy to do on an ongoing basis. I'm not sure I'd want to go backwards and categorize 4 years of previous spending though.

* I'm essentially using this method to track expenses and plan spending

posted by mazola at 9:02 AM on June 30, 2011

You could:
* calculate the minimum balance of your savings account. That represents roughly the amount you could have transferred into a higher reward (higher risk) investment without having to sacrifice any of the transactions you've made.
* run a Fourier transform on the timeseries and see if it can identify any cyclic purchases, or an autocorrelation.
* calculate the volatility, as measured by standard deviation.
* If nothing else, you've got historic data on which you can build upon and validate your other data collection efforts.

I track all my finances in GNUCash, and recent releases have added SQL backend support, theoretically opening up more options for analysis tools. That data is very useful for planning and budgeting, as I can go back and look at what's happened historically. Some argue for a Zero budgeting system, whereby you start from zero and plan EVERYTHING out, but most of us are probably more concerned with the status quo and making minor adjustments. I can also keep track of who I've loaned money to and whether they've repaid me etc.

It's not too late to pull out as much banking transaction history as possible and throw it into gnucash. OFX support would be best, .csv is okay, and paper statements are quite tedious but doable. The spreadsheet you have will be useful for the notes about what you were doing on a given month 4 years ago.
posted by pwnguin at 11:16 AM on June 30, 2011

I'd take a look at how much I was adding per month vs how much I was taking out and see if there's a tendency towards stability, growth, or shrinkage. Then based on the tendancy you want, you can change the amount you put into the account.
posted by garlic at 12:29 PM on June 30, 2011

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