How to manage your finances like a diet

Burger skewered with knife

Like all other engineers, I like data. I don’t like working towards something that has no measurable endpoint. So when I want to shed a few kilograms, I approach it like I would any other problem at work as well. I define the goal and determine how I’m going to get there.

My weight loss process

Typically, I weight about 80 kg, but my ideal weight is 78 kg. I just feel comfortable then and it leaves me at a reasonable Body Mass Index (BMI). I try to keep my weight around this number, but every now and then it creeps up a bit. However, I have a tried and tested way of getting it down again, using what I can measure.

I know that 1 kg of fat stores 7 700 calories. Then from monitoring my metabolic rate using my watch, I know that I use about 2 350 calories a day. So, if I did not eat for slightly more than 3 days, I would lose 1 kg. Don’t worry, the diet doesn’t require me to stop eating until I weight 78 kg. I love chocolates way too much.

I know that I can cut my food intake to 2 000 calories without feeling that I am starving. You can track this using an app called My Fitness Pal. I can realistically burn 350 calories more than I consume per day. At that rate, I can drop 1 kg every 22 days (7 700 calories per kilogram/350 calories per day). So when I want to drop 3 kg (like I want to do in the new year), it will take me about 2 months to achieve it.

Exercise

Now, I also enjoy jogging and do it about twice a week. When I jog my regular route it is exactly 5 km, and according to my watch, I burn about 400 calories doing it. This adds another 800 calories a week to the deficit.

However, I don’t count this towards the calories that I use to lose weight. These are my cheat calories. If I want chocolate or a slice of pizza, I don’t mind having it. As long as it is less than the calories I burned jogging the week. This way I never feel guilty for treating myself.

If I do this consistently, I always lose weight. It isn’t the fastest way, but it is effective and I don’t feel like I’m on a diet. This got me thinking about the parallels between my weight loss system and how to manage your finances.

How to manage your finances

Most of us get a fixed amount of money per month that we can spend. Like the calories we consume, we consume a portion of the salary on the things that we need. You can change the amount of money that you spend every month by closely monitoring your spending habits. For this, you can use 22seven or any other tracking software.

Every month you consistently monitor your spending and make sure that you come in under budget. You don’t need to save 90% of your salary (although you can if you want to), it just needs to be at least 20% and you need to do it diligently. If you consistently consume 20% fewer calories than you burn, you will lose weight. If you consistently spend 20% less than you make, you will become financially independent.

Some months will be brilliant, other months it will be a clusterfuck. Just make sure that the long-term average is a reasonable amount. Don’t beat yourself up if you fail sometimes. Our savings rate is all over the place as is evident from our monthly finance update, which is why I’m more concerned with the average saving figures.

The key is finding that monthly spending amount that does not feel like you are compromising. Otherwise, it will not be sustainable and you will figuratively feel like you are starving. We all know the old cliché, you are what you eat. The same goes for your spending habits. You can either end up with useless stuff you don’t use anymore or a few valuable items, wonderful experiences and memories with your family.

Cheat days

Just like jogging every now and then, you will get additional money now and then. It might be a tax rebate, a side hustle that brings in some cash or an inheritance. Use some of it on the things that are important to you and then save the rest. You don’t need to save every cent. No-one is racing you to retirement. You need to get there with your sanity in check while you grabbed every opportunity that came your way.

The big difference

There is one massive difference between investing for your retirement and going on a diet. The money you save compounds. So you do not have to save each and every cent that you have in retirement. If you diligently save for 40 years, you have only contributed 12% of the savings you have for retirement. Imagine if we lost 8 times the weight of our daily calorie deficit. So in theory, saving for your retirement is significantly easier than going on a diet.

Be safe out there,

Hendrik

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Endnote

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