Tracking My Progress
THOMAS JEFFERSON once said that eternal vigilance is the price of liberty, and the philosopher Socrates opined that the unexamined life isn’t worth living.
Although they were talking about political freedom and personal philosophy, respectively, Jefferson and Socrates could well have been discussing personal finance. One of the best ways to engage in financial vigilance and self-examination is to keep a daily financial journal.
I’ve kept a personal journal since I was 14 years old, and I’ve written a daily personal financial journal for the past 15 years or so. While both practices have been beneficial, here I’ll talk about how I keep a financial journal.
Every morning, coffee in hand, I sit down on the couch, fire up my laptop, and grab a pen and my journal. A date goes in the upper left-hand corner of the day’s page. The top third of my journal I dedicate to non-retirement matters.
On the top left go bank account balances. I also list a brokerage account not designated for retirement. These entries detail all the funds I have on hand. Checking these accounts daily ensures that incoming pay has actually been credited and that outgoing checks have cleared.
In the middle of the top of the page, I list a running total of the charitable contributions I’ve made for the year. This total confirms whether or not I’ve hit the mark on my charitable aspirations. Right below this number, I list any bills coming due. This item keeps me from forgetting about them and incurring late charges. I also list here upcoming quarterly state and federal tax payments.
Finally, I list my Discover and American Express running totals. Discover I use for big, unexpected bills like car repair or cat repair or Doug repair. My American Express I use for day-to-day expenses.
One of the benefits of checking and logging these numbers daily is to detect fraud promptly. Once, in the early hours, I was noting my American Express charges from the previous day.
Trip to Aldi. Check. Coffee at work. Check. Four Uber trips in a California city I’ve never been to? A quick call to American Express resulted in shutting down the account and eventual issuance of a new card.
A second benefit of checking American Express every day is that doing so makes it easier to track the quality and quantity of my day-to-day purchases. I can see relatively quickly whether I’m spending too much and will overshoot my monthly goals. In an article, Bola Sokunbi argues that “consistently keeping a spending journal will tell you exactly what’s happening with your money.” If you don’t track your expenses, it’s difficult to change them.
Under my credit card expenditures, I also list my two credit scores and my "membership rewards" points, which I faithfully transfer to my Delta Skymiles account every month.
After I finish with current accounts, I move to retirement. Starting with my tax-advantaged accounts, I list current values, making a note by each account detailing when it will be used and how. For example, by one account, I might write, “Post-70 annuity.”
On the right-hand side of the page, I list the current balance of a pre-Secure Act IRA I inherited in 2011. I also record the amount of the required minimum distribution (RMD) I’ve taken for the year. Below the inherited IRA, I list the current value of my Roth IRA.
The two accounts are listed together because they work in tandem. Every year since 2014, I’ve paid taxes on the RMD and deposited the remainder into the Roth. Checking these accounts helps me ensure that my contributions have actually made it into the Roth and that they aren’t sitting for months without being invested.
Below my tax-advantaged growth accounts, I list my two dividend accounts—a REIT index fund from Vanguard Group and a managed stock dividend account. I also note the dividends I’ve received for the year, and I make sure that these numbers are growing.
Finally, below my dividend accounts, I list my three non-stock core retirement accounts. First, I list the balance on my Calvert Community Investment Notes, and I also keep a running log of the dividends I’ve received for the year. Then I list the current value of my cash-balance pension plan. Every two weeks, I use an online calculator to run an income projection. I want to know where I’m going to stand in about 13 years. Finally, using my online My Social Security account, I run projections of my Social Security income at 67 and 70 every month or so.
Knowing where you stand is half the battle in personal finance. It can keep you from panicking and worrying.
Another advantage of daily tracking is that if—God forbid—there’s a security breach, I’ll know about it in almost real time. Ditto if I ever try to log in and can’t.
Finally, while I recognize that there are apps that’ll perform some of these functions, I don’t want to link my accounts, plus I get pleasure out of watching a blank page take shape every morning.
In 1852, Henry David Thoreau celebrated the keeping of a journal. While Thoreau was writing about personal journaling, his thoughts apply to keeping a financial diary: “The contemplation of the unfinished picture may suggest its harmonious completion. Associate reverently and as much as you can with your loftiest thoughts. Each thought that is welcomed and recorded is a nest egg, by the side of which more will be laid.”
Douglas W. Texter is an associate professor of English at Johnson County Community College in Overland Park, Kansas. Doug teaches a composition I course that focuses on personal finance. His essays and fiction have appeared in venues such as the Chronicle of Higher Education, Utopian Studies, New English Review and The Writers of the Future Anthology. Check out Doug's previous articles.The post Tracking My Progress appeared first on HumbleDollar.
