3 Things All Medical Professionals Should Track

March 4th, 2020
March 4, 2020
Joseph Vecchio

What gets measured, gets managed!

The idea is simple – when you pay attention to something and actively track it, you’re more likely to improve it.

The concept applies to many areas beyond business, including personal finance. Successfully managing your finances is about setting goals, then taking necessary steps over time to reach those goals. By keeping tabs on the right areas of your financial life, you’ll be more likely to take the action required to achieve the things that are important to you.

In this post, we’ll share three of the most important indicators to track in your financial life. One of them is quantitative, one is qualitative, and one is a mix of the two. We’ll explain why these items are important and why keeping a close eye on them can be so impactful.

#1 Net Worth

Net worth is the simplest definition of wealth. It’s what you own (your assets) minus what you owe (your liabilities). Net worth is the best indicator of how successfully you’re converting your income into wealth. It’s important to recognize that you can increase your net worth either by saving more (increasing your assets) or by paying down debt (decreasing your liabilities). So, for the young physician with student loans, the simple act of paying down those loans is building wealth. While fluctuations in the stock market can impact net worth during various periods, you want to see your net worth rising steadily over time. If this isn’t happening, it’s time to revisit your saving and spending decisions.

#2 Money “Happiness”

This indicator is far less concrete than net worth, but no less important. Money happiness is the degree to which your spending (or saving) is bringing you joy and satisfaction, and it tends to be maximized when your spending and saving decisions are aligned with your personal values. Take the time to regularly step back and reflect on how you’re spending your money and whether it’s truly bringing you happiness. Similarly, if you’re overly focused on saving, be sure to think about the other side of the coin and whether you’re actually enjoying your money along the way.

If you feel stressed about spending or saving either too much or too little, think about what changes you could make to help create a better balance. And when considering ways to maximize money happiness, keep in mind that spending on experiences tends to bring greater joy than buying possessions, and spending on others tends to be more fulfilling than spending on ourselves.

#3 Progress Toward Your Goals

For any financial goal, there’s a certain amount of money you must save/invest over a particular period to reach the goal. Goals can include many things, like a down payment for a house, paying off student loans, funding college for the kids, or retiring at age 60 while maintaining your current lifestyle. Regardless of the goal, you want to be making steady progress toward it over time. In order to do this, you not only have to know what to do at the outset (how much to save each year, how to invest the money, etc.), but you also have to know what adjustments to make over time.

This is why tracking your progress toward goals is so important. If you don’t know how you’re trending relative to where you want to go, it’s impossible to make any adjustments necessary to get back on track. Monitoring your progress also provides a sense of satisfaction. When you see yourself moving in the right direction, you’re encouraged to continue. Unfortunately, the process requires detailed calculations and adjusting several variables, which can be difficult without specialized software. Because of that, progress toward goals can be the most challenging of the three metrics to track. Regardless of whether you do it on your own or look for outside help, measuring progress and making necessary adjustments over time is essential.

Conclusion

If something is part of your routine and always top of mind, it’s naturally going to receive more attention and effort. When it comes to managing your finances, it can be easy to get caught in the weeds. However, know that you don’t need to track every last metric. Instead, start by focusing on the handful that will truly move the needle and make a difference in both your financial success and enjoyment of life. Net worth, money happiness, and progress toward your goals are great places to start. If you can measure these regularly, you’ll greatly increase your chances of managing them successfully.

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