You can’t manage what you don’t measure

By | January 13, 2014

This is a follow-up post to You manage what you measure. That post explains the why. This post explains the how.

Making a visual aid is the quickest ways to shed some fat off your financial avatar. My favorite is the chart.

If the visual looks pretty, I, for one, am more inclined to update it. Put some effort into making your goals a reality. This is relatively small effort for potentially large rewards.

Supplies needed:

  • Enough of your financial data to answer just two questions. How much money came IN to my life last month? How much money went OUT of my life last month?
  • 2 different colored writing utensils
  • I used to use plain poster board, but this ghost grid poster board makes updating the chart accurately so easy and so pretty.
  • Ruler
  • Calculator
  • Tape

X axis measures time*. Y axis measures dollars.
*Yes, that is my attempt at a clock.

Step 1) Draw an x/y-axis on your poster board with the ruler. The x-axis will measure points in time and the y-axis will represent amounts.

Step 2) Look through the paperwork from the last month of your life and calculate two numbers:  How much money came into and how much money went out of your life in the last month.

Step 3) Plot the numbers on your chart. Use a different color for each number.

Step 4) Tape the poster somewhere you will see it most days (I use my closet door).

Step 5) Live your life for approximately 28-31 days.

Step 6) Recalculate and plot those two numbers again.

Step 7) Remind yourself daily – Money in MUST be more than money out.

Step  8) Repeat Steps 5-7.

Step 9) Eat a lot of peaches. (You never make it to step 9)

Numbers don’t lie. Awareness of your finances is half the battle.

3 thoughts on “You can’t manage what you don’t measure

  1. Brian

    Hi Thriftygal. Does a loan payment count as money going out of your life?

    Reply
  2. Jason

    When I receive a loan, I show both the “income” of the loan as well as the “liability” of the loan. In the case of a car, there would be no income – I’m betting the car never has value again, though that’s a conservative view. But the loan is now already showing up as money that left my life. When I make a loan payment, I count the interest against me, but the principal payment doesn’t change my balance for better or worse (but we know it’s better because there will be less interest leaking out of my life in the future.)

    Reply

Thoughts? Recommendations? Candy? Anything you can give me is highly appreciated.

This site uses Akismet to reduce spam. Learn how your comment data is processed.