Whether you are running a multi-million dollar business or simply managing your own personal finances, there is one thing that I believe is critically important to both: tracking and measuring.
The first of every month, I like to not only track my net worth in my spreadsheet, but I also track anything of major importance on the business side of my life.
This includes revenue, expenses, website traffic, twitter growth, etc.
No matter what you are doing it ALWAYS makes sense to take a moment to track the progress, IN A SPREADSHEET.
This is invaluable for several reasons….
5 Reasons Why You Should Track Monthly
1. You’ll Recognize Patterns
As you begin to measure your net worth, business revenue, expenses, etc, you’ll begin to recognize patterns and spot problems quicker.
For instance, by tracking your budget monthly, you might notice that you’ve spent more on restaurants in the last month than intended, and make a decision to dial back this month.
Or you might catch a subtle downward trend in revenue that otherwise wouldn’t be noticed.
In other words, you will immediately be able to spot and fix problems or notice larger trends as they are happening.
3. You’ll Know the Numbers by Heart
In both your personal life and your business life you’ll begin to know the numbers.
I can’t tell you how many business meetings I was in that my business partners had absolutely no idea which way was up because they weren’t the ones actively measuring/tracking the numbers.
It’s not that they didn’t actively keep tabs of our business, but since they didn’t manually track themselves, they didn’t have the same type of number recall.
When you track yourself, you’ll begin to know the numbers intimately, which is needed in important business settings.
3. It Doesn’t Take As Long As You Think
Measuring and tracking doesn’t take all that long.
You can use an automated method like Empower, Quickbooks, or something similar, but you should still have a sheet to track the end of month result.
For my net worth, it is as simple as opening up Empower and then copying/pasting numbers over into my spreadsheet.
The simple act of tracking helps me to internalize and know my numbers better.
And it seriously takes me only 15 minutes to do.
Now, tracking business revenue and expenses can take longer, but its good to take the time to actively track those as well.
In fact today, I’ve already tracked everything I need to…AND I went out to lunch with my wife…AND I went shopping for some new clothes….AND I wrote this article.
4. You Won’t Waste Your Time Worrying About Things On The Daily
There is absolutely NO REASON to worry about bigger things like net worth, company revenue, or expenses on the daily.
It’s sort of like watching the news. There is a lot going on, but also nothing going on.
Each day individually matters, but tracking daily does not.
It takes about a good month before you can truly dig into the real trends in your finances.
And this is the same for your net worth.
Sure you can track daily and automatically (and I do with many things), but it’s only going to cause anxiety and stress in the long run to pay attention to it daily.
5. Years over Months
BUUUT, while month-over-month movement does matter, it is not something to stress over either.
You are interested in how things are looking year-over-year.
If your business is down month-over-month it may still be up year-over-year.
And even if it it is down year-over-year, which happens, tracking helps you to figure out what is going on and why.
But you can’t track year-over-year growth if you don’t track anything in the first place.
Tracking is the key. Eventually you’ll have years worth of data that you’ll be able to help make important decisions.
What gets measured gets improved
I’m sure I can find more reasons than the above, but the overarching message as Peter Drucker famously said “What gets measured gets improved.”
Drucker was a big proponent of measuring everything from your time to your to the important performance indicators that you’ll need to run your specific business or personal finances.
And while I track many things from my time to my happiness, I find that the end of month reporting is more valuable than any day to day tracking can ever be.
But when you begin to measure things that matter, you will immediately spot things that do or do not belong.
So no matter if you are tracking daily, monthly, quarterly, or yearly, I think the important thing is that you are indeed tracking!