In the world of personal finance, numbers rule. Whether your finances are organised and structured as they should be if you’re planning early financial freedom, or totally disorganised as a result of living pay-cheque to pay-cheque, it’s the numbers that keep our lives ticking along.
So it may come as as surprise that for someone who has retired early as a result of reaching financial independence, I’m actually pretty hopeless with maths and absorbing numbers in general. I refer to this inability as ‘mathematical dyslexia’.
I’ve never been a ‘numbers’ guy. Right from early on, maths of any kind just went right over my head. I was always one of the kids in the class who demanded special attention to have the slimmest hope of passing maths tests. When it came to high school, I failed my first attempt at the 5th form (Grade 10) maths exam (School Certificate as it was called back then) with a score of 26%. Although I progressed to the next grade (or ‘form’ as it was in New Zealand back in the 70’s) I was still required to spend another whole year relearning the previous year’s maths again. I recall it didn’t seem any easier the second time around, but with the added indignity of struggling along with students a year younger than me.
Well, it turns out that I must have learnt a bit more that year. A whole 100% more in fact, because my score from sitting this exam the second time around, was 51%. I suspect that the marker may have just felt sorry for me rather than this being a demonstration of my new-found mathematical prowess.
As my career moved along I found myself, still mathematically dyslexic, working at a large, diverse US multi-national in a sales and marketing role. One of their practices was for each Business Unit to have monthly meetings where the previous month’s business activities and performance were reviewed.
No issues there, until the Group Accountant got up and put his financial performance slides (yes, slides) up on the old OHP* and went over the numbers.
* OHP – overhead projector. Remember those? Does anyone still use one?
At this point, my eyes would usually glaze over and my mind would go to its happy place, a place where numbers don’t exist. Probably not the most career enhancing move I ever made, but those numbers………. sheesh, bored now.
Being the ever practical chappy that I am, I eventually devised a new method of presenting accounting figures that would not only mean that anyone in the room (specifically me) could get the gist of how we were performing, but also would save significant time that, in my opinion, was being wasted going over the nitty-gritty of the previous month’s finances.
All it would take is for our Group Accountant to do all of the analysis, allocate a score from 1 to 9 based on how well we’d done, and chuck that up on the OHP. A 1 is obviously very bad and we should start looking for new jobs, and 9 means we can start planning how we’re going to spend our substantial bonuses. I think you get the picture.
Needless to say, my revolutionary development didn’t fly in this organisation. I was surprised although no one else seemed to be. What could be more simple? A picture tells a thousand words and all that. And, of course, if you want more detail, it’s available for you to dig into at your leisure. I reckon the problem was that I was just ahead of my time.
Now fly forward many years to today and although my grasp of numeracy hasn’t improved greatly, there are now plenty of tools available online to help me and others who are numerically challenged understand what they all mean.
One of the keys to reaching financial independence is having a ‘road-map’ to tell you where you currently are and where you need to go to reach your goal. It stands to reason doesn’t it. If you’ve got little idea of how much you’re saving, how much you’re spending, and where your hard earned pennies are being spent, how can you begin to calculate how much you’ll need to retire, and how close you are to that glorious day.
Pocketbook Budget Planner & Tracking App
One of the online tools I’ve been using to make tracking my finances much easier is Pocketbook. Designed in Australia, Pocketbook is a free app that can download all of your banking and credit card transactions automatically and allows you to allocate expenses and income into however many different categories you want.
At the time of writing, there are currently 17 Australian major banking organisations providing automated transaction downloads with more being added all the time.
If your bank isn’t supported for automated downloads, you can still update your Pocketbook account with manual downloads from your bank using industry standard OFX and QIF file formats, and failing that, using converted CSV files. So you can still use Pocketbook if you bank outside of Australia or even if you hide your savings under the mattress, it just won’t be quite as convenient.
Once you’ve set up your accounts in Pocketbook and allowed it to synch with your banks, you’ll find that 80% of your transactions are automatically categorised although you can manually change these on a case-by-case basis or across every transaction in that expense. So for example, all of the purchases from your local supermarket are automatically labelled ‘Groceries’ except for a couple of them that may be work related so you recategorise these manually as ‘Work Expense’. That helps remove these when you do your expenditure analysis.
Using the Analysis page allows you to filter spending and income by category to see exactly where all of your hard earned is coming from and going to over whatever time period you choose.
One of the beauties of Pocketbook is that you can download your banking transaction history as far back as you want. So if you start using Pocketbook to monitor your financial position today, you can set it up to give the past 12 months transactions right from first using it. No need to wait for a time period to load enough data to give you the true picture of your finances.
It also has a handy budgeting feature that allows you to set a discretionary spending limit each week that you can track in real time. It’ll tell you how much you’re spending on things like entertainment and dining-out to help you keep on track with your budget.
With an iOS and Android version available, you can keep an eye on the spending when you go out so no more excuses for busting the budget as a result of a big night out. If you’re adhering to a strict budget and savings plan, big-nights-out probably have to become much-smaller-nights-out eh.
For me, the biggest take from Pocketbook, apart from being free of course, is that it’s so easy to set-up and use, and provides such simple but detailed analysis of where my expenditure is going in an-easy-to-understand graphical format that allows me to track my annual budget in real-time.
If you live in Australia and have accounts and credit cards with the major banks and financial institutions, I thoroughly recommend Pocketbook to manage your money and your budget. It’s safe and secure and free.
We’ve been around the globe with Pocketbook and it is truly world leading. In 2013, CNET called us the “best app of its kind (they) have ever seen” and Apple heavily featured us on their AppStore.
Additionally, we were also a finalist in the global SWIFT Fintech Startup Competition in Dubai (SWIFT are the guys you use when you do bank transfers to overseas relatives, so they know a thing or two about global banking). – Bosco, Pocketbook co-founder
Have you tried Pocketbook yet? If you have, give us some of your own feedback on it. Would you also recommend it to readers?