When it comes to money, I’ve become a total control freak. It’s paying off; I’m starting to see significant improvements in my financial situation. In our highly automated and digitized world, I’ve realized that I prefer a manual, hands-on approach to personal finance. There are thousands of resources out there that are designed to make it easier to manage your money. There are software programs like Quicken and websites like Mint.com. There are automatic bill pay services and spending trackers. There are tax services and financial planning services. I don’t use any of ’em.
Instead, I use my own custom created spreadsheets. My financial spreadsheets are massive and exceedingly detailed. They have color codes and abbreviations that wouldn’t mean anything to anyone but me. They are not particularly efficient and they are definitely not pretty. But I love my spreadsheets. I dutifully and obsessively use them to track my spending, monitor my savings, and identify potential trouble spots. I also use them to run “what if” scenarios. I make projections based on different levels of future income or rates of return to see how the changes affect my goals and the time it will take to achieve them.
Sure, using financial software or websites to perform these functions would save me a lot of time. But I don’t think that would be the best thing for me. My cumbersome, manual approach to personal finance has many advantages:
It forces me to spend a lot of time thinking about my money and financial goals. There are programs that will automatically link to your debit and credit cards to download and categorize transactions. This is definitely an easy way to keep track of spending by category. But if I relied on automatic processes, I know I’d only review my spending every couple of weeks. Because I enter all of my receipts and categorize them by hand, I am forced to review my spending every couple of days. This enables me to spot troublesome spending patterns and correct them immediately.
It provides me with 100% flexibility. No two people’s priorities are the same when it comes to spending. When I was a blonde, I spent a lot of money maintaining my do. In fact, I spent so much that I had an entirely separate “Hair” category in my budget. None of the software programs I could buy would come with a Hair category built in. Whatever it is, we all probably have some quirky spending categories that are significant enough to be tracked and monitored. We might also have quirky goals that we intend to meet through creative means (yard sales, side jobs, blackmail, etc.). A customized spreadsheet is the best way to handle these unique situations.
It helps me better understand personal finance and how wealth is accumulated. Being actively involved in my finances has demystified the process of accumulating wealth. Now I can see firsthand how debt drains resources that could otherwise be used for building a strong financial future. I now realize that there is no magic to personal finance… It’s simply a matter of making a plan and sticking to it.
It makes me feel more confident. With greater understanding comes greater confidence. I really like feeling like I’m in control of my own destiny, and that my destiny is not in trouble with me in the driver’s seat. I have a long way to go to achieve my goals, but I never worry about my financial future any more. I know I’m doing the right things. I know I’ll be just fine.
I’m not saying the manual approach would work for everyone, but it seems to be a good fit for me, at least for now. I consider myself a financial beginner. I’m still learning the basics of personal finance and defining my long term goals. My net worth is relatively low and I don’t have a lot of investments that I need to manage. At this point in my life, being a control freak is both manageable and educational.
Now if I could just get Rick James out of my head…