Photo Credit: chefranden
Not everything that can be measured is important, and not everything that is important can be measured. In the case of financial goals, however, tracking progress is an important habit to develop for at least two reasons:
Mid-course corrections: Tracking progress allows us to see if we’re moving in the right direction at the right speed. If our spending has crept higher, for example, tracking progress will let us know so we can make the proper adjustments. It gives us some measure of control over our finances. And as we meet our goals (which we’ll know by tracking our progress), it motivates us to move to the next level.
See slow success: Positive changes to our finances often occur at glacial speeds. Unless we’ve won the lottery or inherited a fortune, improvements to our net worth and portfolios often occur in a three-step forward two-step back fashion that can be frustrating. Looking back over long periods of time, however, will show (hopefully) consistent growth. I started measuring our net worth in 2003. When I get frustrated with the seeming lack of progress we’re making, I take a look at where we’ve come from for a needed morale boost.