6 Tips To Help Create Accountability With Your Personal Finances
One area I’ve been trying to make consistent improvements in over the last few years is creating accountability. Particularly, taking responsibility, complete ownership and control of my personal finances.
Accountability is defined as an obligation or willingness to accept responsibility or to account for one’s actions.
In my opinion (and many others), personal finances are an obligation.
You have a personal duty to effectively manage your money for the greater good. That greater good might be you individually, your family or society as a whole. Whether your intention is short-term happiness and lavish living or long-term sustainability for your loved ones, taking accountability with your money will ensure you have the best opportunity to meet that intention.
In my life that intention is to create financial freedom so that I have the opportunity to live an intended lifestyle in the (near) future with my family and friends.
To make that a reality I need to take accountability for my finances.
I’ve made mistakes in the past with money (see my post Stupid Money Mistakes I’ve Made). Luckily, I learned from them and snapped out of it to right the ship. I realized no one was in control of my financial situation but myself. I took the responsibility and have since looked to continually implement accountability with my money.
There are dozens of tactics to improve your financial situation. Here are 6 tips that (could) help create accountability with your personal finances and help you achieve your money goals.
The first step is figuring out the “why” for your personal finances. You could label this as your vision or purpose. This is that bigger picture and intention you’re looking to fulfill. It’s hard to take accountability and self responsibility when you don’t know what you’re committed to. As I noted above, for me that is financial freedom.
- Psychology Today has an article on finding your purpose and steps to help you identify that within yourself
- Forbes also shared an article with ways to discover your life purpose
- The University Of Minnesota has a great series of articles on Life Purpose
After you have a framework for what that “why” is, you can concentrate on specific goals for the short, mid and long term.
I prefer a reverse engineering approach by taking that long term goal and creating a backwards course of accountability on achieving it. This road map helps create a sense of feasibility and allows for you to take a more engaged ownership on your financial journey.
One year reverse engineered to three month intervals, then to weekly and finally daily goals.
I wrote more about financial goal setting in my post Achieve Your Financial Goals – Finding The “How” For Your Money. I discuss “SMART” goals, short-term micro goals and the power of running the numbers more in-depth in that post.
I call this tip the Memento strategy to creating accountability with your personal finances. If you’ve seen the 2000 film Memento that reference will make sense as you read ahead.
If you haven’t watched this great movie, the main character has short-term memory loss and that plays a major role. He uses photos with written messages, Post It Notes and even tattoos to remind himself of key facts. Okay, so you can see what I am getting at now?
I’ve used Post It Notes, graphs and status charts to help create accountability with my financial goals.
These might be debt repayments, side hustle targets, savings rates or investment goals. If you visited my home, you’d see these proudly displayed. On the fridge, beside the computer desk, on the mirror, closet door, etc. Outside the home these are noted within my daily journal and at my office.
There are two main benefits I’ve found by doing this.
The act of writing or printing these out helps solidify and reinforce the improvements (or shortcomings) I am making with my money. The other benefit is the ongoing reminder creates a more engaged feeling of self responsibility and ownership. It also adds an element of gamification when I see green check marks or the graphs move in the positive direction.
Check out the website Debt Free Charts for some great free financial charts (or $1 charts). From emergency fund saving to various debt repayment charts, they’ve got awesome tools to add a visual element to your financial goals.
This might not be the ideal solution for you if you don’t want to be showcasing your finances around the house.
Again this is all about personal preference and what works best for you.
In a similar fashion to the section above, I used the power of technology to develop a system of reminders and reinforcement. The net-benefit is the same as above: creating accountability and ownership of my personal finances through the act of continuous engagement.
Two tools I use to achieve this are Todoist and Google Calendar.
I plug everything financial, fitness, professional and personal into Todoist. It’s the #1 digital tool I use for planning, prioritizing and creating checklists. From the micro short term to more grandeur bigger picture, it all goes into Todoist. I have the paid premium version thanks to my workplace but the basic tier is still an effective tool for everyday use.
If you want to read more in-depth about Todoist, here is a very detailed review by Life Success Engineer.
The email and banner notifications on Google Calendar are another great tactic to support with this overall theme of ownership through engagement. For me, these reminders and notifications might be a motivational quote, status update on a savings goal, bill payment, etc. Google Calendar is a powerful tool for scheduling, planning, setting alerts and so much more.
Here is a 2018 tutorial video on Google Calendar if you want to see the basics in action.
Having your money top of mind, to whatever degree of regularity you want that to be, will help drive that sense of ownership and responsibility.
There are probably other efficient platforms for helping create accountability but Todoist and Google Calendar are working for me. Of course the financial apps and digital services can help us with that, but more on that in #5.
The main outcome is to build an easily accessible system with recurring reminders, checkpoints and updates. You always have your phone with you, so what better tool could there be to support this financial accountability effort?
The power of support through a trusting, willing and honest accountability partner will make achieving your money goals a more realistic outcome.
Why go it alone when you can create accountability with your personal finances alongside the added motivation, knowledge and support of another person?
The American Society of Training and Development (ASTD) conducted a study on accountability and found that having an accountability partner increases the likelihood of attaining that goal by up to 95%.
Whether it increases it 95% or 5%, I think we’d all agree that having a support system for accountability with your money is a beneficial tactic. With that in mind, who could be an accountability partner for your finances?
- Significant Other: The most important support system to creating accountability with your personal finances would of course be your significant other. Money can create many conflicts but if you’re openly discussing your financial situation, having recurring check-ins and collectively working towards a greater good, the feasibility of accomplishing these goals are exponentially increased.
- Friends: If you have a friend in a similar lifestyle and financial situation as you, why not leverage each other’s support and collective knowledge? It’s no different than that study partner in university or workout buddy at the gym. You can push each other to be better and also provide a means of recognition as you reach those goals.
- Online Communities: Connections with like-minded people made through social media, forums (like Rockstar Finance) or blogs (there are 100’s, if not 1000’s) can be great accountability partners too. You can share advice and best practices, chat more in-depth via Skype…sometimes these online communities turn into FinCon.
Whether it’s your wife, boyfriend, sister, Uncle, best friend, colleague, a mentor or somebody else, your accountability and commitment to finances will benefit from that support system. Schedule accountability meetings, share podcasts and reading materials with one another and push each other to be better.
In order to have ownership and a sense of self responsibility, I knew I needed to understand my money situation. I needed to know how my budget, spending habits and savings rate were trending. If you aren’t tracking the status of your finances, you’re essentially walking blind through a long, winding journey.
It’s hard to have accountability if you don’t know where you stand with your money.
Thankfully, there are a bevy of financial apps and services for us to consider and make use of to accomplish just that.
The power of automation, goal setting, ongoing reminders, budgeting and holistic tracking are all key features that help create accountability. Plus at any given time we can dive into one of these financial services and get insight into exactly where our money stands.
Mint allows you to sync and automate all of your accounts, track your spending, organize and categorize, build budgets and more in an intuitive manner. It helps identify those areas of overspending and opportunities for improvement while ensuring you can have visuals on your full financial landscape. I’ve used Mint for years and it’s been a great tool for me.
Personal Capital is a must use platform for Americans looking to track their finances, monitor their net worth and manage their investments. It’s a shame Personal Capital isn’t available in Canada. However, I have used the platform and almost all respected members of the financial community recommend it as a amazing money management tool.
I’ve never personally used the service but again have heard great things about YNAB. It’s helped thousands of people get control of their finances and improve their money management. For consistency, here is a review of YNAB by The Investor Junkie again.
These are just 3 of the many products (free or paid) currently available. Find one that works for you and the system you’re looking to build for your money. Accountability is supported by understanding and insight.
I’ve found it much easier to take ownership and have a more thorough understand of my finances since I started using Mint. Being able to so easily see my successes or shortcomings creates that accountability I need.
Speaking of those successes…
Depending on your situation, the financial journey can be a long and thankless grind. Well I guess your bank accounts are thankful and future you will be very appreciative. Still the path to success will likely take discipline, diligence, short-term sacrifices and ignoring the FOMO (fear of missing out).
Continued motivation and commitment will be a major determinant in reaching that long-term goal. This financial accountability can be greatly benefited by some positive reinforcement.
Given we’re on the track for financial betterment, we have to be selective and control the expense of these wins.
Depending on your financial situation and rewards system, you can best determine what works for you. Maybe every time you make that extra mortgage or student loan payment, you go get your favourite cheap burrito. Or after you max out your Roth IRA (or TFSA) annual contribution limit, you grab a bottle of your most cost-effective, yet delicious wine.
There are a million means of recognition and celebration you can use to stay motivated on this righteous path.
Again, it’s all personal and what will work for you.
Lifehack posted a recent article on How To Celebrate Small Wins To Achieve Big Goals, that touches on this motivation, commitment and much more.
That positive reinforcement will do wonders for maintaining accountability to the long-term greater good of your finances.
The tactics above have worked for me. However, the most important thing about finances is they’re personal. These might not be the ideal solution for you. And that’s okay. You might have your own system or be able to build a better fit for your life and money.
Creating accountability with my finances has helped ensure I take a vested and engaged approach with them at every level.
The debt repayment and savings charts printed out by the computer play a role.
Mint and Todoist play a role.
My girlfriend, friends and the personal finance community play role.
Collectively these tactics are all working together to create accountability and take ownership of every step of my financial journey.
There is a long road ahead but remaining accountable will be key.
Here are some other posts to help you take control of your money and life:
- 15 Smart Money Moves You Can (Easily) Make This Month
- Calculate Your Net Worth – Why Do It And How To Track It For Free
- The Personal Finance Resources And Content That Saved My Life
- Understanding Your Credit Score And How To Check It For Free
- 35+ Rewarding Side Hustles Anyone Can Do To Earn More Money
- 5 Easy Financial Wins I Had When Starting My Personal Finance Journey
- Building Good Money Habits – Make Momentum With Your Money
What tools or tactics do you use to stay accountable to your finances? What other tips could help others take accountability?
Let me know in the comments below.