Why Measuring Financial Progress is so Important
19th March 2006
Bob Parsons built two businesses from the ground up. And I’m not talking about small businesses either. His first business sold for $64 million and the second runs ads during the Super Bowl. So when he wrote an article telling why measuring financial progress is so important, I took notice.
Granted, his article focused on business, but I’ve started treating my personal finances a little bit more like a business. In short, I need to make more money than I spend - just like a business. So I thought I’d review the tools I use to keep my personal finances on a profitable course. Maybe they will help in your finances.
Here’s the tools I’m currently using to measure my financial progress:
- Check Register My check register is an Excel spreadsheet I keep updated 5 times a week. That might sound a bit obsessive, but with online checking, it only takes minutes a day. Handling my monthly statement used to be a nightmare, but now it becomes a quick review. Also, keeping track of my daily money flow lets me know if I’m keeping on budget.
- Monthly Budget This is another spreadsheet that outlines my espected monthly income and where it’s going. I plan out where every dollar is going (not down to the penny). It took a bit of getting used to, but now I’m able to copy last month’s budget and modify it. My pay and expenses are pretty steady, so I usually don’t have to change a lot. And I’ll be honest, things don’t always go according to plan. That’s where keeping track of my money on a daily basis helps so much. If I need to make an adjustment, I know exactly where I stand, so I can shift where my money goes accordingly.
- Monthly Debt Chart While I’m eliminating my debt, I keep a chart of what my credit cards are and what amount I owe on each of them. I update it once a month and keep a version of it on this site. I sincerely hope I won’t have to keep this particular chart for very much longer.
- Quarterly Retirement Plan Statements I’m a lightweight (right now) when it comes to retirement funds. But I still do review my quarterly statements to see where I’m at. I sincerely hope I have so much money in my retirement accounts that I have to come up with a slightly more sophisticated system.
So far, that’s the big ones that I use. It isn’t much, bit I don’t need much right now. The key is that these tools work for me. I spend far less time worrying about money because I know where my money is going almost every day. I’ll go into more detail on these in the future, but that should give a good overview. Have a tool that works for you? Comment and let me know.
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