Skip to content

Personal finances

This is a description of how Firefly III works, and how I feel about personal finances.

Firefly III has been built around how I manage my finances. Please read this carefully so we match on how to do things.

The general idea

After being a grownup for a while I noticed I was living from paycheck to paycheck. I could not save money. At the end of my money, I still had a part of the month to cover.

The first thing I did was simple: I started living from the first day of the month until the last. This meant that I had to change a few things. This is something I do to this day:

  1. On the day I get paid, I move my entire salary to my savings account. All of it. Not a penny missing!
  2. Then, I try to live the rest of the month on the money I have left. This was very hard the first few times.
  3. On the last day of the month, I think how much money I will need in the next month.
  4. On the first day of the month, I put that amount in my checking account.

So if you get paid on the 23rd of the month, your salary sits in your savings account from the 23rd until the first day of the next month, when you move (part of it) back to your checking account. If you get paid every week, this routine repeats weekly.

This method of managing money works whatever your boss' payment schedule is. Move your salary to a different account (step 1) any time you get it and wait for the start of the month.

This is quite difficult the first few times, but after a while you'll notice that you have (pretty effectively) moved your routine away from your salary and income. This alone gives you great financial stability.

This procedure allowed me to program a very simple tool (the original "Firefly") which held very simple things: transactions. Oh and some accounts to keep track of the money. But that was basically it. It showed me where my money went.

In those early, exciting days, all I did was live from the 1st to the 31st of the month. This helped me save a lot of money already. The rest of Firefly III's features have been built around this idea.

The next step

To keep on top of your finances (using Firefly III), you must be aware of your finances. There are no shortcuts. You can use the import function and you can use the recurring transactions, but it won't help you one bit. It just gives you fancy charts. All knowledge and no wisdom.

If you're serious about changing your financial habits, you should enter each transaction manually. Feel the impact of each penny you spend, and before you know it you'll spend a lot less of them.

Accounting versus personal finance


The text below feels a bit like a rant, but I'm going to keep it up regardless.

I don't like accounting. I don't like the fact that people buy a $60,000 sports car and then pretend they haven't just lost 60 grand by putting up the car as an "asset". As if you get your money back. I also don't like that people put up their house against their mortgage. It's not money. You don't have it. A Rembrand could be worth a million but it won't buy you a loaf of bread.

Last update: 2021-10-16