Measures of Fiscal Fitness

My wife and I are going on a cruise at the end of this month to help celebrate a friend’s 50th birthday.  This was decided in February, and so at that time I decided that I wanted to lose weight before leaving.  I weighed 218 pounds at the time and wanted to lose about 30 pounds or so.

I did well for awhile but during the summer months got stuck at 208.  I can tell you that it was because I stopped counting my calories.  In the spring, I was using an app on my phone and tracking every calorie I put in my mouth.  I was diligent and did not go over my 2,000 calorie allotment.  As I lost weight, however, I thought that I could figure it out on my own.  Yeah right.  You know how that ended up.

I met with my trainer on Saturday and told him my renewed enthusiasm for getting down to 200 pounds by the end of the month.  I told him I had stopped tracking my calories which was the reason that I had been stuck for a few months but that now I had to limit myself to 1500 calories per day.  He wisely offered me what I consider the quote of the year if not longer:

“When we stop tracking, we start slacking”  –Vee Furgeson

One time each week, I spend 20 minutes with Vee doing about 5 or 6 exercises in a high intensity training fashion, meaning that each repetition is designed to take from 20-30 seconds in a controlled fashion.  The exercise is completed to failure which should take from 1-2 minutes and then you move on to the next exercise.

Vee and the other trainers keep a record of every exercise their clients have ever done with the weight and time.  For me, that is about 6 years worth of data.  I can look back to see that I started the leg press at about 200 pounds and am now at 625 pounds.  Each week,  I look at my time from the previous sessions when I did that particular exercise and try to beat my time if only by 1 or 2 seconds.  Eventually, Vee will add 2.5 pounds to the exercise and I will establish a new time for the new weight.

The bottom line is that Vee knows tracking.  Here is Vee doing some high intensity training:

High Intensity Leg Extension

So what does this have to do with finances?  Simple.  If you are not tracking some measure of fiscal fitness then you are slacking and not getting the biggest bang for your buck.  A dollar here and a dollar there will add up just like those calories did for me when I got stuck at 208 pounds.

Various Fiscal Numbers to Track

Here are several ideas of measurements that you can make regarding your finances that will allow you to improve upon your financial situation.

1. Spending–If you are just getting started in your fiscal fitness, then you should really be tracking spending.  It is impossible to improve anything without knowing where your money goes each month.  I will be tracking spending by only spending with a debit card and limiting the amount of cash that will be allowed each week.
2. Income–Of course it is always useful to know how much money you make each week or month, but it can be especially useful to track income from a side income like blogging.  It can also be useful when trying to grow passive income like dividends from stock investing to set a goal and strive to achieve it.
3. Cash Flow–Combine income and spending into a monthly spending plan (budget is a dirty word) and you can track your monthly cash flow.  You want that number to be positive on a consistent basis to use that excess cash flow for investing in assets or paying off liabilities.  If the number is negative, then it is time to decrease spending or increase income.
4. Net Worth–Net worth is the sum of all assets minus all liabilities.  It is a nice number to know.  If cash flow is positive month after month, then net worth should be growing.  It is possible, however, to have a positive net worth and a negative cash flow.  Of the two, I think cash flow is more important.
5. Debt–I included this as its own category because it is very important to monitor and track debt.  I have done this over the years but haven’t been as diligent about eliminating it just like I have been weighing myself and knowing my weight but doing little about it.  Ultimately, it doesn’t work.  I will begin targeting specific debts with the goal of eliminating them for good.
   
6. Return on Investment–This is great information to have especially when deciding what to do with excess cash flow.  Should you pay off debt or buy some real estate?  What about investing in stocks?  Is the return guaranteed or is there some risk involved?  Knowing the expected cash on cash return on investment can help make those decisions easier.  It can also help if you know your track record of making these decisions in the past.

These are just of few of the financial numbers that I think are important to track and use to set goals for improvement.  It is certainly not all of them.  I will be focusing on increasing my tracking of several of these numbers over the next 15 months to see what I can accomplish.  I will be sharing from time to time on my progress as well to maintain some accountability.

Readers:  What fiscal measures do you use to track your progress?  What other measures would you add to the list?