Something magical happens when you regularly track your money habits. Tracking allows you to see patterns where things might not be going as you’d like, and highlights where you need to take action. Because, instead of facing a financial mess, you’re laying a great foundation for your monetary future with positive, progressive, and smart changes.
Today, I’m talking about the top 5 things I think are really important to track, in order to keep a nice, close watch on your finances. The Healthy Money Planner helps me to consistently track these things, but it doesn’t really matter how you do it, as long as you do!
Top 5 Things to Track
When I was working as a doctor in a hospital, each patient required observations on things like blood pressure, pulse, etc., and the person doing the observations had to record an overall score.
For example, if the patient’s blood pressure, pulse or temperature was abnormal, they’d be given a point for each abnormal reading.
A score over a certain number of points would alert the team to take action, such as adding antibiotics or increasing fluids. (Essentially, whatever was required to prevent the patient from deteriorating further). It’s the same with these tracking scores. Regular tracking makes it easier to spot abnormalities and take the necessary action, so here are the top 5 things you need to track to stay in control of your money.
Your credit score reflects how financial institutions rate your eligibility for credit. There are a number of credit reference agencies that you could use to find out your score. Personally, I like to use Experian and Credit Karma (2 out of 3 agencies available in the UK), but some people check all of them. As the credit score agencies available to you will differ depending on your country, a quick online search should bring up those relevant to you.
If you can, try to avoid signing up for a paid service. Some agencies will charge a membership fee for your credit score and report, but there are ways you can access them for free (certainly in the UK, anyway).
As well as monitoring your credit score, it’s a good idea to check your credit file to make sure everything is correct. Things like; do they have the right address for you? Are you associated with anybody you shouldn’t be, or have an historic account link, for example? Other things to look at might be how much credit you’re using. Also, are you on the electoral register?
These things all count towards your credit score, so by checking it on a month-to-month basis, you can see first-hand any progress or changes you need to make. Additionally, a company such as Credit Karma can help you by offering suggestions on how to improve your score. This, together with the other actions mentioned below, all help to push you in the right direction.
Track Debt, Assets and Net Worth
For a long time, I had a lot of debt. I had them all listed, and every time I paid one off, I could cross it off my list. Then, using the snowball method, I would increase the payments on the next debt, then cross that one off, and so on. Tracking your debts is a really good habit to get into, because it gives you that much-needed momentum and you can easily see your progress.
Happily, all of my consumer debt is now paid off. I still have other debt in the form of a student loan to pay off, but I don’t see that as a debt. For me, I consider my student loan to be more like a tax; something I agree on with Martin Lewis. If you’re curious to know more, take a look at how he interprets student loans (applicable in the UK).
Assets & Net Worth
On the other side of this, are our assets, such as emergency funds, and investment growth. I add all of these things together to keep track of the total sum of my life assets. Using this information, I’m able to work out my net worth by subtracting my debts (or “liabilities”), from my assets.
When I had lots of debt, my net worth was negative. Your net worth provides you with an overall view of how close you are to your retirement. You can see at what stage your assets could potentially bring you an income, enabling you to either work fewer hours, or retire altogether.
What constitutes an asset and what constitutes a liability is debatable. While many of us consider our home to be an asset, in order to access the money, you need to sell it. Of course, you still have to live somewhere. So, in terms of retirement goals, your home technically isn’t included when it comes to your net worth. On the other hand, you could release a small percentage of equity from your home to use for living expenses, and this would then become a cash asset.
So, the type of assets I’m referring to here are the ones where you can actually access the money there and then. Things like investments, dividend payments from investment income, and passive income from businesses and properties.
Net worth and your Financial Future
The ultimate goal is to build enough wealth, through multiple streams of income (not just from your work), in order to reach a level that enables you to either stop working or slow down. For some people, this might simply be from a steady-growth pension. And when their pension reaches a certain level, they can retire.
Of course, this level might not provide the kind of retirement lifestyle that they originally envisaged for themselves. So, it’s really worth thinking about how much money you’ll need/desire for the future. This is why tracking your net worth is so essential, because it really opens your eyes to see whether you’re on track — or not.
The fourth thing I track is a running total of what I’m spending my money on, particularly unplanned spending. Planned spending is already included in my budget, but by tracking my unplanned spending, I can tweak my budget for the next month if needed. This also enables me to check in with myself and think about any stressful events I might have had to deal with, or something unexpected which involved spending extra money that wouldn’t otherwise go into next month’s budget.
The fifth and final thing I track very carefully is my income, because I want to acknowledge all the abundance that’s coming into my life. I track any payments that I get from my business, as well as income I get through self-employment as a doctor.
Learn How to Build Your Assets and Reduce Your Debt
If you want to learn more about building assets and reducing your debt, you need to come and join our (amazing) Abundance Clinic. It’s already enjoyed and valued by so many wonderful women and is such a supportive space. To make things really easy for you, I’m running a special offer for you to access the entire membership for just $1, for 30 days. For 1 entire month, you get unrestricted access to all the premium content, zoom calls, as well as getting to meet the fabulous, supportive ladies in the group.
We’d love for you to stay as a full member after your $1 trial. It’s so important for me to ensure that as many people as possible understand the concepts and tools/knowledge they need to build wealth for their future, so I really hope you’ll come and join us.
I hope the above was useful. Take care of yourself, and I’ll catch up with you soon.
Bye for now!
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