Thought of the Day
If you enjoyed this post,
- Treat your personal finance as your own business.
- A business in debt is a business in debt, if you are in debt, you are in debt.
- A business flush in cash is a business flush in cash, if you are flush in cash, you are flush in cash.
- A business with assets is a business with assets, if you are with assets, you are with assets.
Today, I was going over my finances using Money Plus Deluxe
For example, using my spreadsheet, I was able to calculate the trailing average of my net worth. In business, a trailing average is used to measure the average over a specific timeframe. In my case, I had 4 trailing averages. See the chart first before reading my explanation of the averages I am using.
| Trailing Average | 2007 | 2008 |
| +/- Over Previous Month | 789.07 | 183.86 |
| % +/- Over Previous Month | 3.85% | .72% |
| +/- Over 12 Months | 6478.08 | 7565.76 |
| % +/- Over 12 Months | 29.74% | 30.83% |
The +/- basically represents either an increase or a decrease. There are two sets of measurements I am using here, over the previous month and over the previous 12 months. So for 2007, my net worth increased on average $789.27 over the previous months. My net worth increased by an average of $6,478.08 over the past 12 months.
The % +/- basically represents the percentage of increase or decrease in my net worth. As you can see, my trailing average in 2007 for the previous month was 3.85%. This tells me I grew my net worth at a rate of nearly 4% per month, or nearly 30% per month over the previous 12 months.
As you can see in 2008, my trailing average over the previous month is significantly lower than it was in 2007. Keep in mind I am writing this on February 28th. 2008 is leap year so there is still one more day to go. The numbers for 2008 will change tomorrow as my dividends, interests, and paycheck are deposited. The numbers for 2008 will also change as the year progresses.
However, my trailing average for the previous 12 months this year so far has risen by a full percentage point.
Comment by ark from MTheLocoMono on 29 February 2008:
Had another thought,
If a business provides their employees with a retirement plan, it is your business to provide your personal finances with a retirement plan.
That was kind of awkward to put into words but I think you get the general idea.
Comment by Lulugal11 on 29 March 2008:
I agree with you on treating the business like your personal finances. Many people separate them and think differently instead of thinking that they need to manage the business as if it were a part of your regular personal finances.
Lulugal11’s last blog post..Save Money by Walking to WalMart
Comment by Mark from TheLocoMono on 29 March 2008:
It’s just a random thought but I wonder if when the world switched from small businesses to mass production where people gave up their family businesses to work in the factories, etc… is when we lost sight of treating our personal finances like a business.