Tracking Your Finances:
It’s a new year (yay for new!) and it’s time to start tracking your finances FOR REAL this year. Here’s what you need:
- Basic Budget Spreadsheet – You need to know what you spend. My budget is very elaborate and all spending fits into categories (which allows me to track my spending and turn it into awesome pie charts!). Yours can be as simple or as complicated as you would like. But you absolutely need to keep track of where your money is going. Every single dollar of it!
- Debt Spreadsheet – (obviously you only need this if you have debt) Since our only debt is our mortgage, I have a simple amortization spreadsheet that keeps track of my interest paid each month, my extra payments, and how much I save over the life of the loan on my extra payments. For other debts, a spreadsheet that includes how much interest you’re paying and allows you to play with how much you save and how much you cut your loan length by paying extra is good. Again, this spreadsheet is going to be different based on your needs (and you can probably find a free Excel sheet that works for you by Googling it).
- Your Money or Your Life Chart – I’ve talked extensively about this already, but this chart helps you visualize your progress. I also keep track of my monthly savings amount on this chart.
- Personal Capital* – This is the only automated tool I use that’s not a spreadsheet and it tracks everything: my net worth, my debts, my credit card charges, my investments, my investment fees. It also puts everything together in one dashboard so I can see everything with one login! The service is free.
What can you Track?
If you follow our monthly plan update posts, you’ll notice that I have a million metrics that I follow and one of them is always worth celebrating. In the past year, we’ve celebrated:
- Our investment balance surpassing our mortgage balance (March 2016)
- Over 50% savings rate (April 2016) – For my calculations, I use the total we saved/invested that month (I add retirement savings + extra mortgage payments) and then divide that by the total (pre-tax) much we made that month. You can decide, based on your savings priorities, what to include in your own calculation.
- Hitting $100,000 in investments (June 2016) – while on vacation!
- Our mortgage balance going under $70,000 (July 2016)
- Monthly interest on the mortgage dropped below $200 (September 2016) – This is a metric I like tracking – each month and each extra payment made knocks down the monthly fee I owe the bank!
- Mortgage balance dropping below $60,000 (October 2016)
- My 4% monthly investment income breaking $400 (November 2016 – didn’t mention it in the update) – This is a metric from the YMOYL chart – it helps you track how much money you could safely withdraw monthly if you quit today.
We’ve also celebrated hitting financial goals we’ve set for ourselves, but the little celebrations keep us motivated along the way. You’ll notice that we had something to celebrate nearly every month this year. The more you track, the more milestones you can celebrate along the way that keep you moving forward!
Time to start tracking!
What metrics do you track that I didn’t mention?
Personal Capital links on the blog are affiliate links. At NO COST to you, we get a “thank you” commission if you sign up through our links. If you don’t feel good about that, open a new window and go directly to their landing page.