This is the full description of how Firefly III works. The “grand theory”.
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:
- On the day I get paid, I move my entire salary to my savings account. All of it. Not a penny missing!
- Then, I try to live the rest of the month on the money I have left. This was very hard the first few times.
- On the last day of the month, I think how much money I will need in the next month.
- 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 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’s features have been built around this idea.
The next step
To keep on top of your finances (using Firefly), you must be aware of your finances. This is the reason Firefly III features very little “automation”. Firefly won’t create your rent payment automatically. It won’t try to predict expenses. There are no shortcuts. Except for the import-feature, Firefly will not create or update transactions for you.
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.