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You are here: Home / Personal Finance / What Keeps Jacob From My Personal Finance Journey Financially Motivated?

What Keeps Jacob From My Personal Finance Journey Financially Motivated?

By //  by guest

This is a guest post from Jacob at My Personal Finance Journey as part of the Yakezie blog swap. This week, everyone wrote about what motivates them to be financially responsible. You can view my post at Jacob’s blog too by clicking here.

[***On June 11-12 this summer, Jacob will be doing a two day MS150 bike ride event to promote awareness for multiple sclerosis disease and to raise investments for MS research and support programs. If you are interested in helping out with a tax-deductible donation, please click on his donation page link. Just $10 will make a world of difference!]

Howdy folks! It’s a pleasure to be guest posting on KNS Financial today as part of the 5th Yakezie Blog Swap!

There are three main things that motivate to be financially responsible beyond all else – 1) achieving my Purpose Focused Financial Plan, 2) keeping a running financial/net worth progress update each month and making adjustments to maintain my asset allocation targets, and 3) communicating the results with the blogging community.

Let’s tackle what each of these things are one-by-one below.

1) Achieving My Purpose Focused Financial Plan

This is a system that I adopted after reading David Bach’s book, “Smart Couples Finish Rich.” A Purpose Focused Financial Plan is a very interesting personal finance strategy that David adopts with the people he advises in his financial planning business.

If you haven’t read it already, I would strongly recommend that you pick up a $0.01 (cheap!) used copy of the book from Amazon – Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner.

Essentially, what the strategy is all about is that people/couples should plan for their specific values and life dreams, as opposed to planning what material possessions are needed for life (can be easily influenced by contemporary culture).

Executing the strategy involves the four steps shown below:

  • Define the 1) importance and 2) purpose of money in your life.
    • 1) Involves ranking the importance of money in your life on a scale from 1-10.
    • 2) Involves a qualitative description of how you view the role of money in your life.
  • Determine and take action on your life values.
    • Your life values action plan is based around goals that you specifically want (and one could almost say need) to do in your life in order to be fulfilled.
  • Determine and take action on your life dreams.
    • Your dream action plan is based around “fun” things that you want to accomplish in life that will enable you to live an extraordinary life, based upon your standards.
  • Place your dream and life values savings on autopilot.
    • This involves setting up savings vehicles to ensure that your values and dreams are met.

Basically, the overall goal of a Purpose Focused Financial Plan is to live a more proactive life, instead of just responding to whatever the environment around you throws your way. Once you have defined your Purpose Focused Financial Plan, it is important to review it once per year to see if your life values and dreams have changed.

Having a plan to follow and revisiting my goals once per year very much helps me keep on track financially.

You can view the complete description of how I set up my Purpose Focused Financial Plan by clicking the following link – My Personal Finance Journey’s Purpose Focused Financial Plan.

2) Tracking Net Worth and Financial Goal Progress Each Month

After setting up my Purpose Focused Financial Plan and reviewing it once per year (in step #1 above), the next thing that I do is to create short-term, mid-term, and long-term goals that reinforce my Purpose Focused Financial Plan.

Then, on a more frequent, monthly basis, I track 1) my progress on all of these goals and 2) my current net worth and asset allocation.

General wisdom and advice recommends only tracking net worth and asset allocation once or twice per year. However, since I am a finance nerd (and enjoy it!) and tracking my progress keeps me motivated financially, I do this action once per month. Furthermore, as a passive (index fund) investor, asset allocation and rebalancing is pretty much the only thing I can do with my investing strategy!

In this monthly review, I check my current asset allocation percentages against my investment strategy allocation targets, and rebalance allocation levels if I am outside the +/- 5% band level.

3) Updating My Progress On My Blog Holds Me More Accountable

Last but certainly not least, having a public place (My Personal Finance Journey) where I post these net worth and financial goal updates helps keep me much more accountable than if I was just plugging along by myself.

It is very refreshing to have a place where I can share my thoughts and progress with other link-minded folks and learn new things that I can deploy in my financial strategy.

How about you all? What motivates you to keep “on-track” financially?

Share your experiences by commenting below!

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Filed Under: Personal Finance Tagged With: Personal Finance, Yakezie

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Reader Interactions

Comments

  1. LaTisha @FSYAonline

    April 10, 2011 at 7:53 am

    I’ve never heard of that financial plan, but it sounds very comprehensive. I like the part about making it automatic, that definitely takes most of the effort out.

    • Jacob @ My Personal Finance Journey

      April 10, 2011 at 11:04 pm

      Thanks for reading Latisha! I definitely enjoyed reading about it. It’s refreshing to hear about a personal finance system that caters to your values and wants in life!

  2. Barb Friedberg

    April 10, 2011 at 7:47 am

    Well organized and straightforward and INSPIRING. Great job JaCOB.

  3. Robert @ The College Investor

    April 9, 2011 at 12:24 pm

    Keeping my goals posted on my blog and checking in on the status also keeps me on track. It is fun to look back at goals and updates and see the progress.

    • Jacob @ My Personal Finance Journey

      April 9, 2011 at 2:57 pm

      Definitely Robert! One thing that amazes me about those type of updates is how at the beginning of the year, a goal like funding your Roth IRA fully @ $5000 can seem so daunting, but once you split it up month by month, it’s awesome to see the progress being made!

  4. Dave @ Money In The 20s

    April 9, 2011 at 8:05 am

    Great post, Jacob! I agree with updating your progress on a blog keeps you accountable. That was one of the driving factors for me to create my blog. I want to put everything out there so that I can be held accountable!

    • Jacob @ My Personal Finance Journey

      April 9, 2011 at 3:13 pm

      Thanks for reading Dave! I’ve subscribed to your blog now and will look forward to following your updates!

  5. Andrea @ So Over Debt

    April 8, 2011 at 9:08 pm

    I love #2 – while I don’t calculate my net worth because it’s too depressing, I have found that tracking my finances in general is a huge help. If I don’t see where my money is going, it’s too easy to make poor choices.

    Setting goals is something I need to work on – I tend to have vague goals like “save more money” and “quit eating out all the time.” I think I’m scared that I would fail to meet specific goals and become discouraged. It must be working for you, though, because I can tell from reading your past posts that you’re very organized!

    Thanks for what you shared with us.

    • Jacob @ My Personal Finance Journey

      April 9, 2011 at 3:16 pm

      Hey Andrea! Thanks for reading and commenting! Actually, if so, I would definitely recommend David’s book above for you! One aspect of setting up your life values and dreams is to create a 48 hr action plan. What this involves is taking some SMALL step in the next two days to get started towards your goals. This can be something as small as reading wikipedia about a vacation you want to take! But, the important thing is that it gets you started!

      • Andrea @ So Over Debt

        April 10, 2011 at 9:10 am

        I read one of David’s ebooks once. I was a little turned off by the constant advertisements for his other books – maybe that was unique to the ebook since it was free?

        • Jacob @ My Personal Finance Journey

          April 10, 2011 at 12:20 pm

          I can imagine! I hate when free ebooks are more of an advertisement than anything else! But, in his print-books, they aren’t like that.

  6. Suba @ Wealth Informatics

    April 8, 2011 at 1:28 pm

    I am a fan of goals and planning. I have not discussed our goals with anyone because we have a couple of major goals and except 1 (buying a home), everything is well, not normal. So people will just laugh at us, I think 🙂 We have targeted spending plan. All our goals get money first, whatever is left over comes to checking account for us to spend. So we go over our spending plan one month, we HAVE to take the money out from one of our goals (ally bank sub accounts). We know exactly what goal is getting delayed due to our extravagance one month. That keeps us in check. Great post, Jacob!

    • Jacob @ My Personal Finance Journey

      April 9, 2011 at 3:17 pm

      I’ve heard really good things about the Ally savings account. One of the highest APY’s you can get these days! Much higher than the insulting 0.05% Bank of America is offering on their savings accounts.

  7. Jacob @ My Personal Finance Journey

    April 8, 2011 at 11:05 am

    Thanks so much Khaleef for the opportunity to guest post on your site! I very much enjoyed writing it!

  8. Alan

    April 8, 2011 at 10:53 am

    Excellent post! I especially agree with placing “your dream and life values savings on autopilot”. For me the autopilot is critical, because it’s just too time consuming to do it any other way.

    Alan

    • Jacob @ My Personal Finance Journey

      April 8, 2011 at 11:07 am

      Thanks for reading Alan! What savings vehicles do you use to initiate the “auto-piloting?”

  9. krantcents

    April 8, 2011 at 10:48 am

    I am genetically predisposed to be responsible for my actions. My parents were successful starting and running businesses and I worked in those businesses as a child. I chose a career (Chief Financial Officer) that means I must act responsible with finances. My personal life is no different. What keeps me motivated are the rewards of acting responsible. The rewards were being able to do all the things I wanted to do such as start businesses, a great lifestyle, great education for our children, great vacations, and retirement.

    • Jacob @ My Personal Finance Journey

      April 8, 2011 at 11:09 am

      Those are very good motivations, Krantcents! I’ve often thought about how if you are one of the financial leads of a company, how you handle your personal finances would be very important for your image at work as well.

  10. Kevin @ Thousandaire.com

    April 8, 2011 at 9:56 am

    Man, you have it all planned out! I do love thinking about experiences I want instead of “things”. That’s why I’m more focused on travel than I am buying a house or other big purchases.

    • Jacob @ My Personal Finance Journey

      April 8, 2011 at 11:08 am

      Good for you Kevin! If you’re interested in doing some deep life-pondering, I would really recommend reading David’s book, Smart Couples Finish Rich. It probably got me thinking about what really mattered in life more than anything else!

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