Continuing...

In the first message we touched on the benefit of ORGANIZATION in your financial life. So, how do you achieve it?

There are a million ways to approach this question, and the point that you need to understand is "how" is no where near as important as "when". Of course the answer to "when" is NOW.

Some examples of "how" include: MS-Excel spreadsheet, MS-Money, and Quicken. If your financial life isn't terribly complicated, an Excel spreadsheet may suit your needs perfectly. However, as you and your financial life continue to evolve, it will eventually become necessary to use something a little more sophisticated, such as Money or Quicken. I've used them both, and don't really have any qualms against either. AS I indicated before, "how" isn't as important as "when".

Whatever method you choose, once you've set up the system you should enter historic information as far back as 12 months (if you have it). This requires digging out the old bank, investment, and credit card statements and entering the information. This is also where the more sophisticated tools are very useful. In today's connected world, many times you can simply download the transaction history from your bank, investment, or credit card company, and import it directly into your Money or Quicken file. You'll still need to go through and organize things, but much of the data entry is done for you.

If you don't have the time, the facility or the patience to enter this historic information, don't give up. Tracking your information from today forward is valuable as well. Think about it... in a year, you'll have 12 months' worth of history plugged in to your system!

As you generate this history (or review the old history), you'll see patterns emerge, with regard to your spending habits. Perhaps you spend MUCH more on golfing related activities than you realized. Or maybe your home decorating expenses were greater than your mortgage payments over the last year. Each of these kinds of patterns help you to understand the "where" associated with your money. Once you know where your money is going, you can begin to control it to put your money where you really want it to go.

Keeping track of your financial information doesn't have to be an enormous chore. The initial set-up can probably be completed for most folks in a couple of evenings. After that, if you use your money tracking system alongside your checkbook, making entries in the various accounts as you go, keeping this organization intact should be effortless, costing you less than fifteen minutes a month.

Next time, we'll start talking about Net Worth, which is a by-product of this organization process.

Until then, take care -- Jim