I mentioned earlier that this round of spiral learning about finances had some specific goals (which I have a week left to accomplish). Here they are.
- Know my net worth.
- Have a procedure and schedule for keeping #1 up to date.
- Have an easy filing system for incoming financial records (including receipts) so that #2 is easy.
- Have a good idea what different stages in my financial life might look like and when they might occur - working, studying, teaching, retiring... because my life and my finances won't always be this way, a freelancing 22-year-old sleeping on couches and hopping cities with a backpack. In other words, "have well-articulated financial goals." These may change over time, but it's good to have a plan to execute in the absence of anything else happening. I've been very bad about #3, but having good goals as a reason to keep track of things may help with motivation.
- Have access to all the accounts described in #1.
As part of this round of spiral learning, I'm going to try an exercise in radical transparency, inspired by the Money Blue Book blog. For the summer - which I'm going to call May, June, July, and August - I'm going to be keeping track of my personal net worth online. Here. Very publicly.
I have mixed feelings about this; I know a good number of my friends read this blog, and my finances are different than theirs. The numbers are probably better in some ways (no student debt) and worse in others (no steady income, no 401(k)). I'm not doing this to flaunt how well-prepared I am or how much I have. Trust me, there's not that much to flaunt. You'll see soon.
I'm doing this because (1) I'm scared of doing it, which usually indicates I should, and (2) I think it's crazy that our culture is so tight-lipped about personal finance, particularly for young people like me and most of my friends. I don't know how to calculate and track my net worth because I haven't seen many examples of real people doing it. I've never seen anyone else's methods, so I'm running blind on how I can better tweak mine.
Most of the books I read assume you're married with children, thinking about a mortgage and saving for college, with a reasonably-established 401(k), or maybe debt to climb out from before you get there... folks at least 5-10 years older than I am, with a different situation. When I called financial advisors to ask about their rates for a one-time fee-only consultation, I was informed by most that I'm not the kind of client they usually work with. (I thought that might be the case, so I actually asked my VA to make the first phone calls, figuring that a grown man calling on behalf of his employer would make that employer sound more like an investor dedicated to learning rather than a clueless youngster to be dismissed.)
So I'm going to try this 4-month experiment and see if it changes my thinking. And maybe the thinking of my friends who read this blog - I'd love to see my buddies be able to have a life of worry-free abundance, because they should be doing so many awesome things with their lives rather than worrying about paying rent or student loans, or agonizing whether to take the better-paying job to send their son to college rather than the one that feeds their soul but not their pocketbook. To encourage them to make that possible for themselves is something that, as a friend, I need to do.
Enough talk. Time for me to gather statements.