The past can be a valuable predictor of future events. Since I was a child, I have had an interest in both history and money. Over time, I paired these two interests. I began to track much of our financial data and information related to our personal finances. And I realized that I could use this information not only to see how our finances work but better predict how they will perform over future timeframes.
What we track
We track a variety of items in our financial lives. These aspects include utilities consumption and costs, moving costs, net worth, income, home expenses, baby costs, passwords and user names, and overall expenses. While it might seem like a lot of tracking going on in our family, we make it a relatively simple process. And this simple process allows us to conduct our tracking methods efficiently and effectively, minimizing the time and effort that must be put toward it.
How we track it
We’ve never used anything more extensive than standard spreadsheets to track the various financial facets of our lives. Rather than placing our data online or leaving it up to someone else to track, we do it all ourselves. But because of the simplicity of our spreadsheets, it makes our tracking fairly simple.
How we utilize our tracking data
Over the years, we’ve found a variety of purposes for which to use our past data to help us plan for the future. Probably the most significant use for this information is with building budgets.
Budgeting, even in a relatively simple form, can be somewhat difficult because in essence you’re trying to predict the future. Taking a stab at estimating what costs will be, how much income you’ll have to cover costs, and doing things over a multi-month or even year-long period can be hard. However, by using data collected over previous months and years, we can see how and where we’ve spent, what income levels were, and the difference between income and costs. In this way, we can use these past numbers as better predictors of the future and have a better understanding of how our money has been and will be used.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.