Money & the psychology of money
Your Financial Dashboard
Can you read the signals?
When most people buy a car, they’d like to pop the hood to look at the engine or whatever is inside the hood. I never bother because I don’t really know what I’d be looking at. But one thing I do is that I trust the dashboard. Every car has a dashboard with lots of information about the health of the car. When you turn the key to start the engine, every light lights up. With today’s computerized cars, the computer performs a check on everything. If the car needs a service, the word “service” blinks on the dashboard when the car starts up. Lights will turn on and off as and when they need to, to give you information, which you can pass on to your mechanic or the service crew to attend to the problem.
Some lights like fuel or oil lights don’t need a mechanic because you can attend to that yourself. It is not a good idea to ignore the lights on your dashboard.
I was writing an article for one of my corporate clients’ internal newsletter when it occurred to me that these issues are equally applicable to all of us outside of that corporation.
Let’s talk about your financial dashboard. When you were in school, you got a report card and it told you how you performed and where you need to improve. As an employee you get your performance evaluation report which tells you how you are doing in the eyes of your employer.
Your financial dashboard has a lot of information that comes at you. The only question is, do you ever look at your dashboard or do you just keep driving your financial vehicle even when bells and whistles are loud? Do you drown the warning bells by turning on the music of life pressures?
When you begin your financial journey in January, where are you heading? How far are you from your destination? Are you driving in reverse returning to a few years back or are you actually going forward?
On your dashboard are the following documents: your bank statements; your payslips from your employer; the receipts of the items you buy. Invoices and statements from people you owe money to. Statements of your investments. Lists of your assets and lists of your liabilities. All these carry vital signs about your financial story.
Take some time now to look at these. Look at them as when they show up. Don’t just throw them in the drawer. It is only by looking at these that you can determine how your financial machine is doing. Your bank statements will tell you about every place where you have swiped your card. It won’t tell you why you did that, only you can determine and justify. It will tell you about every filling station where you swiped, every grocery store where you swiped, and every ATM where you withdrew money.
If you see too many ATM withdrawals without proper receipts to back up those transactions, you should be concerned. Because too many of us don’t keep records, ATM withdrawals is where “money leaks through your fingers”.
Before you steamroll into the new year, pull by the side of the road and look at your financial dashboard thus far in your life. Set a day aside, and just look at all those documents that carry your financial information. Only those who will do this exercise, can correct their course if they find themselves to be off course. But those that are even afraid to look at the dashboard, may be heading for a financial crash. We did not come here to be reckless drivers, we came here to perfect our driving.