Make Personal Finance Great

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Do you feel like managing your finances can be a chore sometimes? I mean many of us are performing this task on a regular basis to keep out of financial debt, pay bills on time, seek out good investment returns and maintain our overall financial health. But it doesn’t have to be a chore. It can be interesting and gratifying. It can be eye-opening and rewarding.


By finding ways to cut our expenses and using the excess to deploy into investments we research and understand, each time you manage your finances could present an opportunity. We can find a cheaper TV provider, we can find an ETF that charges low fees and has performed better than the mutual fund we were in, or we can come across a credit card offer that provides more cash back than we have now. All those things make Personal Finance great.



What’s Annoying About Personal Finance and How to Overcome It


For me, tracking expenses are annoying. Sometimes I send a text over to my wife asking about a store we visited and what we got. But I try my best to remember because I don’t want to annoy her either. So for the past few years, we implemented a system where she makes a weekly drawdown from our joint checking account to use on regular expenses like groceries, shopping, personal items, dining & entertainment. We may not be maximizing our credit card points with this system, but for us, it’s an efficient and consistent methodology of usage, budgeting and tracking our expenses. For large purchases, however, we do use a credit card and take advantage of points.


Another part of personal finance monitoring that can be annoying for tracking purposes are credits and offsetting expenses. For example, I booked a hotel in Miami this past summer for a weekend getaway for $300 and some change. But because of unforeseen circumstances, I wasn’t able to go and they refunded my credit card. I also use this card for gas and so the charges for gas were offsetting the credit amount I had because of the hotel refund. So how does one track this properly? Well at the time, I didn’t do anything to my budgeting spreadsheet for the credit or the offsetting gas charges because I didn’t have to pay off my card since the credit balance was slowly offsetting.


Consequently, it didn’t affect my bank balance which is what I reconcile against.  It did throw off my expense tracking though because my Dining & Entertainment line was overstated (because that is where I recorded the Miami hotel) and Gas was understated for a couple of months. If I had to do it again, I would probably book the entire amount in Gas because that’s what I truly spent the money on. So the lesson learned here is if you are receiving a credit directly on your credit card statement, you should probably book the initial charge in the expense category where you intend to use up the credit amount. In my case, I should have booked $300ish into Gas.



What’s Awesome About Personal Finance?


Of course seeing investment gains, right? Especially these days, one has to admit it is nice going into your Personal Capital dashboard and seeing how it has increased a little or a lot (the former for me, but hey it’s all good J Checking out your ETFs or stocks and see how they’ve increased the past month or quarter or seeing the dividends you have earned and be reinvested is a great feeling too right?


Of course the positivity of long-term planning makes Personal Finance great. When we think about retirement, for many of us that is in essence long-term planning. And it’s not just about taking your current salary times some arbitrary number like 25 or 40 to gauge how much you’ll need in your nest egg. In fact, Motley Fool identifies six steps to generate a more accurate retirement figure. One of them is identifying other income sources (e.g., social security and/or brokerage account) and the fact that they should be accounted for to arrive at a more accurate number not to mention adjusting for inflation as well. This is what makes Personal Finance great.


We have the sophisticated tools and resources to be able to do these tasks ourselves and feel content and comfortable that we are on the right path. And maybe using these tools and newer ones as they become available and popular will enable us to find more ways to earn income, save, and retire early. Doesn’t the thought of that get you excited and make Personal Finance great?


I recently created a poll on Twitter which asked people what is the simplest part of managing their money. Here are the results:


Make personal finance great again twitter poll simple money man


Source: SMM Twitter Poll



As you can see, reconciling expenses received the most votes in terms of the simplest part. I wasn’t too surprised seeing these results because it is arguably a redundant task. The other two options: Finding ways to save and deploying in investments require more thought and possibly creativity from a Personal Finance standpoint. Maybe those two options are the ones that can make Personal Finance great simply because of the potential they can offer!



So readers apart from the poll results, what is your favorite or greatest part about personal finance? Which tasks concerning your money management do you look forward to and which ones do you dread?





I use Personal Capital because (1) it’s free, (2) it tracks all of my accounts and overall net worth, (3) my account balances automatically update, (4) it shows how my investments are diversified and allocated in various sectors, and (5) can use built-in tools like “Investment Checkup” to get….wait for it…free personalized advice!