One common theme I have picked up from my many conversations is that most people think that they don’t have to track their money. In fact, many take pride in the fact that they have never bothered to do this ever. And not surprisingly, almost all of them are at their wits end figuring out how to put their finances in order.

I can understand multi-millionaires & billionaires not tracking their money, but they have employed best brains in finance to do that. Most of us ordinary folks don’t have that luxury, do we?

My question to each one is, tell me one metric in your personal life or professional life that can be achieved without tracking it?

  • Revenue targets
  • Sales targets
  • Customer retention
  • Profitability goals for your organization
  • Improving your business performance
  • Your own Blood Pressure, Sugar levels, Cholesterol etc. After a certain age this is a yearly activity, isn’t it?
  • Children’s performance in school – I have started plotting and dissecting my son’s report card and papers.

If we track all these metrics day in and day out, why not dedicate some time to our finances? Who else would do that? If you think it’s your insurance agent or the likes, you are sadly mistaken.

Another good reason cited is paucity of time. I suggest each one of us keep a tab on our own activities thru the day. Let’s start by tracking:

  • Time spent on social media.
  • Figuring out how many likes you have received on your FB / What’s app posts / status message.
  • Friends and relatives FB posts / what’s app status messages.
  • Twitter updates and many more

I am sure you will realize you can take time out to track something that is so fundamental to your existence. All it needs is probably 15 mins a day and maybe an hour on your weekend. Once you set the ball rolling, the weekend hour will be reduced to once in a fortnight.

And finally, what is not tracked is not measured and hence not analyzed. One continues to make the same mistakes.

No complex tools are required to do this. Just a simple long book and an excel sheet is enough to get started. All one needs to track is:

  1. Earnings and deductions
  2. Tax liability
  3. All expenses, down to the last T
  4. Investments / savings and what rate of returns is one earning in each instrument and what is the weighted average of the corpus. This will help you determine if returns are beating inflation by a decent margin. If not, one must revisit their asset allocation.

I shall share some basic simple formats for tracking this in my next update. Until then, I hope people buy a long book and start using it.