You’d be amazed at how many things you can do on your BlackBerry without apps. We cover a number of these tasks in our Do It Yourself series, which covers pointless BlackBerry applications. It’s one thing to take down an app someone spent time to create. It’s another to get proactive about an issue. Today we’re going to look at one small aspect of personal finance that can seriously change the way you spend, and ultimately view, your money. It’s the one reason why my savings account has ballooned this year. While the name might turn away half of the population, the blog The Art of Manliness provides many lessons that benefit men and women alike. Recently they published an article outlining four personal finance principles. While they’re all worth a read, one is particularly relevant to our BlackBerry interests.
“When John D. Rockefeller got his first job as a young man, he bought a small red ledger book for 10 cents. He called it Ledger A and took it with him everywhere. Within its pages, he kept track of every single penny he spent or donated. Once Ledger A was filled up, he bought another and called it Ledger B, and continued this habit throughout his life as he rose from assistant bookkeeper to corporate titan. He considered his ledgers to be among his most prized possessions, and he taught all his children to keep track of their expenditures just as he had done.”
The principle at play: you won’t save money unless you’re aware of the money you’re already spending. This isn’t Rockefeller’s day, where nearly every transaction involved cash. Even with checks we had a convenient balance sheet that allowed us to keep track of expenditures and balances. But in the day of credit cards you have no instant feedback to help put your financial situation in perspective. There’s the statement at the end of the month, but how many people actually look at that? Why is awareness of expenditures important? In the July issue of Wired, Thomas Goetz wrote about the power of feedback loops. The idea is that when we receive direct and immediate feedback, we can more capably make changes and adapt. He invokes a powerful story about roadside speed signs. We all have the same thing right in front of us as we drive — the speedometer, of course — but people took more notice of these radar-powered signs. And they slowed down. It was all thanks to feedback loops. A personal finance ledger is another example of a feedback loop. In today’s smartphone-driven world, we no longer need the small notebook. We already carry around a device that is capable of recording those very items. So every time you bust out your credit card or fork over cash, open up your BlackBerry Memo app. Write down the date, what you purchased, and how much it cost. Each time you make a purchase you’ll see that list, and you’ll gain instant awareness of how much you’ve spent in recent days. At the end of the week you can create a tally, and then at the end of the month make a more thorough review. I guarantee that if you stick with this, you’ll spend less and see your savings account balloon.