Money Progress

It has been a while since I have spent enough time working with my finances to write here about it.  The great thing though is that tools I’ve set up have automatically been keeping track of things for me.  I’ve mentioned before that I use Yodlee MoneyCenter to track my net worth and it is still doing so very nicely.

In my previous post about how to feel good about saving money I posted a screenshot from Yodlee with my net worth chart.  I’m doing so again here so that I can both have a personal record and to show you that while it is useful it does have limitations.  Take a look at the chart in the previously mentioned post and then look at the one here.  At a glance, they look surprisingly similar!  If you don’t look at the numbers or dates, they are not very different at all.

Now when you do look at the scales you can see that I have about nine months of new data in this chart and that my net worth has about doubled in that time period.  Yodlee has faithfully kept track of this for me by automatically updating the balances and transactions in all of my accounts over this time period.  The problem is that I’m stuck comparing charts like these two to try and compare my overall financial progress.  I can not view more than twelve months of data at a time, nor can I view data that is older than last year.

I said this chart was how I became interested in tracking my financial progress, and it is also why I’ve become interested in improving the process because of its limitations.  I obviously need to make my own charts that will show me the complete picture for all of the data that I have.

Since my last post and this one, the similar online financial tool Mint has also added a new net worth chart.  It looks extremely similar to Yodlee but it is a bit fancier.  They allow you to select more flexible time periods than Yodlee, which addresses one issue.  However you may notice that the Mint chart below has different data than my Yodlee charts.  This is because I have not had all my accounts on Mint as long as I have had them on Yodlee.

So while both Yodlee and Mint are very helpful tools, I think automatic solutions like this will always have some limitations.  It is clear that I’m going to need to spend time organizing my financial data so that I can create my own charts that will give me a clearer picture of my financial progress.  Jonathan over at My Money Blog has created his own charts and he accomplishes this very nicely.  It is one of my goals to do the same and I will share my results here so that hopefully I can help others in this process as well.

This post has been featured in the 85th edition of the Money Hacks carnival over at Dough Roller.  Go check it out!

Everyone knows that saving money tends to be a bit less glamorous than spending it.  When you spend money, you know what you’re getting.  There is a certainty to it and a concrete object or service that you receive in return.  What do you get for saving money? Well, you get to keep what you already had!  You keep a few extra green pieces of paper in your pocket or you get to watch a black and white number that represents your savings account increase slowly over time.

Doesn’t that sound exciting???!

I didn’t think so.

Ok so how can I feel good about saving money instead of spending it, you might ask.  Maybe you’re going to tell me that I should have a goal that I am saving up for.  I should save up money for a few months to buy that computer I’m wanting instead of just putting it on my credit card today.

Well, that is a good step, and sound advice, but I don’t think it is enough.  All you are doing in that case is saving money now just to spend shortly thereafter.  Sure, the purpose of money is to trade it for useful things, but holding on to it for a longer period of time has some pretty great rewards.  The question is, how can we try and motivate ourselves to save for this payoff that is far in the future?

I think one answer to the question is this, monitor your progress.  It is a simple concept, but I think a very powerful one.  If you do not keep track of your progress, you can start to question the purpose of saving.  If you log into your bank account online and just see a few numbers that represent your money, it doesn’t have much meaning.  You probably don’t care all that much when this number goes up or down.  If you don’t really keep track of all your money, you don’t know if you are making good decisions or bad ones.

This chart is how I became interested in tracking my financial progress.  I hardly knew what ”net worth” was, but I stumbled upon it as I was using Yodlee MoneyCenter.  It was tracking the total balance of all my bank, investment, and credit accounts for me over time.  Since then I now check it all the time.  I probably look at it too much, but I do think it is a very good tool for monitoring your finances.  This particular chart is far from perfect, and it has some inaccuracies, but it clearly let me know how I was doing.

It feels really good to see that line go up.  I know if I save more money each month, I will do even better.  I can see when I spend too much money and do not make much progress.  If I never charted my finances, I don’t think I would care nearly as much about them and my savings would suffer as a result.  I would spend money without knowing how it impacts my total financial position.

Tracking your net worth is the first step, but I think there are even better ways to track your financial progress.  For some financial situations it wouldn’t make sense to track your net worth, but it would be beneficial to track your spending in a similar fashion.  Learning about these methods and even creating new ones will be a central theme on Money Progress.  If you are as interested in tracking your finances and making progress as I am, feel free to subscribe to my blog here or in the top right of the page to get updates when I post more.

Update!

This post was included in the 169th Festival of Frugality at Remodeling This Life!  Go check it out!