Track Your Dollars And Your Miles

Topic: Money Ledger
Key Words: Ledger, Liquid Assets, Adjusting Entry
Word Count: 454
Tomorrow's Likely Topic: I need a tempo run

Yesterday I covered how many miles I've ran since October, and why I do so. Perhaps more importantly, you and I both need to cover the amount of money we have.

At first this might seem simple; look into your checking account, and Yahtzee!, there's the answer. But when I first started doing this over a year ago, I realized I had money all over the place. My main checking account at Bank X, my old account at Bank Y, three online money market accounts, and three CD's in two different places (diversification!). I actually had no idea how much money I saved each month. Sure, I knew my rent, car payment, average power bill, etc., but didn't really know how much I got from the ATM or how much I spent on my main credit card each month.

Quite frankly, I didn't want to know all that stuff. I wanted to keep track of my liquid assets (checking, savings, money market, and CDs) from month to month to see how much I had and how fast it was growing. This allowed me to finally see how my finances changed throughout the year, and most importantly, allowed me to set aggressive savings goals. NEVER did I make a budget. I just knew I saved an average of X a month, and wanted to get to some total six months down the road. If that total was a little over six times what I normally saved in a month (a good goal), it encouraged me to consider purchases and other decisions, if only briefly, before I made them.

Your turn now! Take out some paper (or a spreadsheet if you are so inclined), take out your bank statements, etc., and make a ledger! Most importantly, pick a time of month to do it and stick with that time. Your finances can change a lot from week to week, so you need to be consistent with your timing unless you want wild swings in your totals.

One last thing; if you take out money for something that's an asset, but not liquid (like say a mutual fund), you need to subtract that amount from all previous months. This "adjusting entry" is necessary because you really shouldn't penalize yourself for investing money! Just remove that money from all periods so the months stay on the same basis.

Felix Run tonight, and I am almost certain that I will get new shoes (scary!). I'll cover Felix Runs (and how I'm being pimped by the man) later.