Money Progress

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!