Mighty Bargain Hunter

My financial resolution for 2008

December 3rd, 2007 | by mbhunter |

Patrick over at Cash Money Life tossed financial meat into a pit of personal-finance-minded lions with a great giveaway (iPod Nano) and an even better exercise, which is to develop a SMART financial goal for 2008. SMART is an acronym for specific, measurable, actionable, realistic, and timely.

After meeting with a financial adviser a few months ago, one thing that convicted me was my lack of discipline in financial recordkeeping. I’ve talked about this on my blog and I’ve heard it mentioned many times elsewhere, but haven’t followed through with it myself. It’s not a P-versus-J issue; it’s just a matter of discipline, plain and simple.

The trick is how to make this goal specific and measurable. With a goal like “building up a savings account” or “paying off debt” the specifics are easy to fill in because they’re amounts. But something like “keep better financial records” is more of a process goal, so in addition to stating the goal specifically, one has to develop the measurement framework.

With that in mind, here goes:

• Specific statement of the goal: I want to track and categorize all money coming in and going out of my household.
• Measurable parameters to evaluate: Since this is a process goal, the metrics should measure consistency of application. Ideally I would want to “clear my receipt inbox” each day but life gets in the way at times. This shouldn’t be put off too long, though. Additionally, I need to categorize effectively. It’s easy to categorize a whole bunch of stuff as “other” or “miscellaneous” but doing that defeats the purpose because leaks can hide and grow in the “other” category. The main place where these hide is the cash transactions. So my specific metrics will be to clear out transactions at least ten times a month, with no more than five days in between successive clearings. Also, my goal for recording cash transactions will be to have no more than 10% of the total amount of cash transactions be categorized as “other.”
• Actionable components: This is pretty easy, as I just need to sit down with Quicken and do it. With the cash transaction part, I need to write things down as I spend, and enlist my wife’s help to do the same. This is a perfect opportunity to make use of my snazzy Moleskine and continue working on capturing all my thoughts and important other things in one place, as suggested in Zen To Done. I’ll also need to get a benchmark (accounting) as of the end of the year so I know where I start from.
• Realistic? I would hope so. Demanding that I do this every day would probably be setting myself up for failure, but I think I can do ten times a month.
• Timely? Absolutely. There’s no need to wait.

There’s still a few hours to do the same thing I just did to get into the fray for that iPod Nano and a few other prizes. And even if you don’t get into the drawing, it’s still very worthwhile to put together a year-long financial goal.

I’ll report my progress.