Week 1
Mind the Gap: Unleash Your Financial Superhero

In this week’s course we look at spending, tools, tracking and personal finance / money management skills. Let’s work out how big your gap is!

Week 1 Main content

Watch live Monday 10th June 2024, 8pm UK time or on catchup at any time!

Week 1: How big is your gap?

In this week’s course we look at spending, tools, tracking and personal finance / money management skills. Let’s work out how big your gap is!

Bonus Interview: Late Starter’s Guide to Financial Independence

Watch live Tuesday 11th June 2024, 8pm UK time or on catchup at any time!

Week 1 Q&A

Watch live Thursday 13th June 2024, 8pm UK time or on catchup at any time!

Week 1 Course notes

It’s all about the gap

Let’s work out where the heck all your money goes and if you are getting bang for your buck or pleasure for your pound!

The main two things we want you to get out of week 1 are the importance of

  • your gap
  • tracking your spending

Do you have a positive gap?

Do you know where your money goes each month? Are you spending money on things you don’t even like or use? Are you getting value from your spending? Let’s plug any leaks and have a strong financial ship. WOOT WOOT

Key concepts: week 1

  1. The route to wealth: creating a consistent gap between income and spending
  2. Weekly / monthly expenses – the true cost (Rule of 194 and 840)
  3. Tracking your spending – where does all the money go?
  4. Tracking your gap – how much space do you have between your income and spending each month?

​The route to wealth – creating a consistent gap between income and spending

It’s incredible how many people think that the only route to wealth is to win the lottery, inherit money, or build a business. No one thinks that consistently saving an amount each month and investing it over time will lead to wealth.

The true key to creating wealth over the long term is to create a gap between your income and spending. Spending less than you earn and then investing that gap into assets.

If you are spending more than you earn then you have a negative gap. If you spend everything you earn each month then you have zero gap. If you spend less than you earn and have money left over at the end of the month then you have a positive gap!

The key to creating a consistent gap is working to reduce your spending and working to increase your income.

Increasing your income

There is so much content online about reducing your expenses. This is critical, but there is a floor to how much you can reduce your spending. There is no ceiling to how much you can increase your income.

The two main levers you can pull in building a positive gap are increasing your income and reducing spending. Underneath these 2 levers are many, many different ways you can do it. Here are 10 ideas on how to increase your income.

We aren’t saying it is easy to do, but it is possible. You may have already screwed your expenses to the floor and are thinking “I can’t spend less.” Well great, let’s focus on earning more. This can make a HUGE difference!

It might take time to create the gap, but if you consistently focus on it over the coming weeks we believe you can do it. This is the foundation of everything!

Am I too old or young to start?

The best time to plant a tree was 20 years ago. The next best time is today!

We just need to take small steps from where you are to take control of your finances. It is amazing how small steps build over time to create something amazing. It isn’t all or nothing!

If you think you’re too old to get started, watch this video.

Alan also did an episode of the Rebel Entrepreneur Podcast with Jaymie who felt she was too old to be able to achieve financial independence.

You can listen to the episode here on Spotify or on Apple or Google podcasts.

The key point here is that it doesn’t matter what age you are. If you are still breathing then we can do things to improve your finances. So please check now if you are breathing.

Find a pocket mirror, check to see if it mists up. If yes, then you are in luck because we can help and you can make progress. Getting on top of your finances at any age is a good thing.

If you have ever felt like you are behind, not making the progress you have wanted to then this episode of Rebel Finance School is for you. We have the fabulous Bill Yount and Jackie Cummings Koski with us who started the podcast Catching Up to FI. They both started late and wanted to build a podcast to help people make progress on their financial journey.

Weekly / monthly expenses – true cost

It is amazing how many subscriptions we all end up having. We subscribe to Netflix, Amazon Prime, Spotify, vegetable boxes, insurance and more.

Have you ever checked your banking app or credit card for the recurring regular payments? If not, break out your banking app / credit card app now and check to see what you are subscribing to.

That £15.99 a month on Netflix, £10 on Amazon, £50 on Sky and so on, soon mount up. What would happen to your finances if you cancelled those subscriptions and invested the money instead?

The rules of 194 and 840 show the true cost of monthly and weekly expenses over 10 years, if you had invested the money instead.

Let’s imagine you cancelled Netflix. That is £15.99 a month. If you took that money and invested it in a broad-based index fund how much might you have at the end of 10 years?

For a monthly expense you take the amount and multiply it by 194. £15.99 multiplied by 194 is £3,102. If you took the money you were spending on Netflix and invested it instead you would have £3,103 after 10 years!

If you managed to reduce your car repayment by £100 and invested it instead you would have £19,400 by the end of that 10 year period.

If it is a weekly cost then you multiply the number by 840. Examples of weekly costs might be newspaper subscriptions, magazines, coffee, or other things.

The example on the right came from Rick that we met at the Bristol RFS meetup. Rick had worked out he spend £60 a week at Greggs on coffee and sausage rolls. he was shocked to find out that the TRUE cost of this habit was $50,400 over 10 years, and a bigger belly.

The true costs of recurring expenses:

  • Multiply a monthly cost by 194 to see the true cost over 10 years.
  • Multiply a weekly cost by 840 to see the true cost over 10 years.

This relies on you saving/investing the money you save, not just spending it on something else!

Tracking your spending

So many people say to us, “I just don’t know where the money goes!?”

Katie loves to look at them, smile and say, “Shall we find out?” There are many ways to track your spending. Start the habit of tracking your spending each and every month.

What gets measured gets improved. For increased motivation to track your spending watch the video 6 reasons to track your spending.

We think there are 6 main reasons to track your finances:

  • Reason 1: If you don’t know where the money goes you are in trouble. You will never be able to build wealth with a leaking financial ship!
  • Reason 2: What gets measured gets improved. You can’t improve something that you don’t measure.
  • Reason 3: Direction of travel. Measuring your spending allows you to know if it is going in the right direction or not. Is my spending going up? Down?
  • Reason 4: Subscriptions – wasting money. Most people have subscriptions and the companies are cheeky – they get you to sign up on a free trial, you forget to cancel it, and the money goes out every month. Get rid of those pesky unused or undervalued subscriptions.
  • Reason 5: Gamifying it. Have fun with it. Have levels for your net-worth and spending, and start working out how you can get to the next level. Bring the team together to work on it. Get the kids involved in it.
  • Reason 6: Will you have enough for retirement? Most people have no idea how much they are spending now so how would they tell if they will have enough in retirement? This is critical to understanding your financial needs in the future.

How to Track your spending

This might take some detective work to start with. Maybe you’ll need to look at multiple bank statements or credit cards. Stick with it! Thankfully there are some tools to help you.

Here are 5 different ideas for how to track your spending

  1. Apps specifically designed for the task!
    You link it up to your bank accounts and credit cards and the app pulls through all your transactions into one place so you can see what you’re spending in total. Katie and I look at our total combined spending so we link all of our accounts into one Emma account for both of us. It’s up to you whether you do this individually or as a household.
    There are so many different apps. The main one’s people seem to use form the group are Emma, Snoop, Pocketsmith, YNAB, MoneyHub.
  2. Use one bank card.
    Put all your spending through one card so you can use the data on that card to review and categorise your spending. This makes it super simple to see where all the money goes, but might be impractical for some with multiple accounts and cards.
  3. Banking Apps:
    Some of the modern banking apps have categorising tools within them so you can track your spending and see where the money is going. Check out your bank account and see if they already have this feature built in.
  4. Spreadsheet: Just track your spending in a simple spreadsheet! In a survey of the group we actually found out that 50% of people track through a spreadsheet. This inspired Katie, with the help of the Rebel Ninjas to build a spreadsheet template for you all. Visit this page to get the Spending Tracker free template and for a guide of how to use it.
  5. Pen and paper: Good old-fashioned pen and paper and write down everything you spend.

It doesn’t really matter how you do it, just that you do it. Pick the method that you think you can stick to and start to track your spending. We need to know where the money goes! What is the best system? The one that you actually use!

Tracking your gap

What gets measured gets improved. The act of tracking something gets you to focus on it and the mere act of tracking alters the outcome. The Donegans track their spending each and every month, as well as their investments and body fat percentage. The key numbers! lol

We currently use Emma the app to categorise all our spending. We struggle to recommend the app as it tries to sell you bad investments and teach you about crypto but it works for tracking your finances. Ideally we will launch our own tracking app one day.

Once we have tracked our spending we can look at how much money we have coming in and then work out the gap between the two. This is one of the most critical figures in your finances. Do you have a gap each month?

To work out your gap you subtract your spending from your income to see what is left!

Here are some examples:

  1. You earn £3000 and you spend £2000. Your gap is £1000! YAY positive gap.
  2. You earn £3000 and you spend £3000. No gap. You are spending everything you earn.
  3. You earn £3000 and you spend £3500 because the car breaks down. Your gap is -£500. DANGER! You are losing money.

What we need to look at is your gap over time as some months you might spend a little more than you earn, which is OK if the overall trend is that you have a positive gap.

To make this easy, Katie has created one of her wonderful spreadsheets for you. You can download it here (How Big is your gap Tracker) and start to fill it all out. We also created a Loom video for you to show you how to use it.

Week 1 Homework

To get the most out of this course you must do the homework! The most dangerous words when you’re learning something are “I know that”. None of this is rocket science. You might know this but are you actually doing it?! Are you implementing?

When you do the homework look at May to start with because it’s the most recent month. This is something you should do monthly as part of your monthly finance meeting. More on this in week 5.

So here is the homework for week 1… We’ve summarised it here. Please read on below for more explanation and guidance for each task:

  1. How much did you spend last month?
  2. How big was your gap last month?
  3. Decide how you’ll track your spending for next month onwards and start.

Keen-bean homework. This is completely optional. Extra pineapples if you do the optional work!

  1. Fill in the “how big is your gap” tracker for the year so far
  2. Categorise your May spending
  3. Did you get value from what you bought?
  4. Did you spend in line with your values?
  5. What’s the true cost of your habits?

1. How much did you spend last month?

Read the section above – “How to track your spending” – for help on how to do this. We don’t care how you do it. Just do it!

​​IMPORTANT! We coached someone last year and he was very despondent because he thought his wealth-building rate was zero. He was investing £200 a month but counting this as spending. Any money you use to buy assets is NOT spending. Do not include this in your spending figure.

2. How big was your gap Last Month?

This is the part where you can start to use the How Big is Your Gap calculator! You can download the calculator here and we’ve also made a video for you to explain how to use the calculator. Part 1 of the calculator works out the size of your gap for you.

​If you have any problems using the calculator then please put them in the Facebook group or the comments on YouTube and we will monitor and reply.

3. Decide how you’ll track your spending next month and start

Pick a way of tracking your spending and start doing it. Keep it simple. Start with your best guess of what will work well for you and you can always tweak along the way.

Keen-bean homework

Some of you will just do the homework above and that is perfect. We need to start small and build over time. Some of you will have done that and be wanting more. The keen beans! We love you and honour you with this extra homework! Pick and choose which exercises are most meaningful for you.

4. Fill in the “how big is your gap” tracker for the year so far

The really fun bit comes when you can start to see your trend over the months and the years. Go back and fill in the “how big is your gap” trackers for all the months of the year so far (or as many as you want!)

​5. Categorise your spending for last month

​For each item you bought/spent money on in the last month, categorise it so you can see what areas you’re spending your money on. The different apps have their own categories but you might like to come up with your own.

Choose categories that are meaningful to you. Don’t have more than 10 categories otherwise it becomes too detailed and hard to see what’s going on with your money! We had a friend who had over 30 categories and it was just too much and he spent longer categorising his spending than looking at what he could learn from where his money goes.

I’ve listed the ones we use below. Our categories are particular to our lifestyle and what we typically spend money on. By all means use ours as a starting point but you’ll probably need to adapt them…

  • Accommodation / Housing – Airbnb and hotels
  • Eating out – Restaurants and discretionary naughties
  • Groceries – Food we buy to cook at home
  • Education – Books, courses, videos
  • Transport – All car costs (insurance, services), flights, trains, public transport, car hire
  • Clothes – Clothes, footwear
  • Entertainment – Cinema, shows, cooking courses, spas, fun stuff, renting movies, Thai massages
  • Health – Prescriptions, gym, calisthenics classes, dentist, optician
  • Misc – Cash, gifts, technology and accessories, other random stuff

6. Did you get value from what you bought last month?

Look down the list of what you bought/spent money on. Did you get value from it? Was it a waste of money? No judgement here, just noticing and this is your chance to change things if you want to.

7. Did you spend in line with your values last month?

What do you value in life? What do you get joy from? Does the money you spend bring you joy? What brings you happiness that you could spend money on if you wanted to?

8. What’s the true cost of your habits?

Do you know how much your monthly and weekly habits are really costing you? Re-read the section “Weekly / monthly expenses – The true cost” above and apply to your own spending. We’re not telling you to cancel all fun, we’re asking you to check whether you’re getting value from what you’re doing. If the answer is yes, please continue to do it!

We had a fabulous post of someone doing this in the Facebook group after the course. We were so inspired!

They found little subscriptions that were eating away at their wealth and then used the rule of 194 and 840 to work out what they would have if they invested instead.

It is incredible how this stuff adds up! Katie and I got inspired last night and remembered to cancel our FitBit premium membership before the free period ran out!​

Our desire is to help you take control of your spending, work out where the money goes and then understand if you are really getting value from those purchase.

Activity and discussion questions

So that you have them all in one place, here are the questions we discussed during week 1’s call that will help you to think about your spending further.


  • Look up direct debits/standing orders in your banking app
  • Look up regular payments on your credit cards
  • Are they any you had forgotten about?
  • Pick one. How much would it be worth after 10 years if you invested that money instead? (multiply by 840 weekly or 194 monthly)
  • Are you getting value from your spending?
  • Cancel one of your subscriptions now

Conscious spending

  • What do you value?
  • Are you spending on anything you don’t value?
  • What spending brings you the most joy?

Monthly spending review questions

These are the questions we ask ourselves when we review our spending each month:

  • Any surprises? Where are you spending more or less than you realised?
  • Is your spending in line with your values?
  • Where could you spend less if you wanted to?
  • Where could you spend more if you wanted to?
  • How big is your gap?
  • How might you increase it next month?

How do I earn more?

It’s not all about decreasing your spending, there are ways to increase your earnings, which will increase your gap and make it easier for you to save and invest. We ran a recent workshop on how to increase your income. Watch it here and let us know what you think.

Thinking of starting your own business or side-hustle to earn some more money? Check out Rebel Business School, which teaches you how to start with NO money.

Ask for help

Remember to reach out in the Facebook group with any questions you have or if you get stuck. Don’t let confusion be an excuse for not progressing with this stuff. We are here to support you!