When it comes to personal finance – and life in general, for that matter – I’ve never been one to chase fads. I prefer timeless truths and proven ideas. That’s why I’m such a fan of the business classic, “Good to Great.” And it’s why I’m so intrigued with how well the insights that book contains about the keys to business success apply to the successful use of money.
In this sixth installment of our look at the personal finance implications of “Good to Great,” the focus is on technology. Author Jim Collins found that for each of the remarkably successful companies he profiled, technology was never the creator of their momentum; it was an accelerator. By the same token, technology by itself won’t give you a great financial life (unless you invent the next Internet), but it can certainly be a big help.
Choose the Right Technology for Your Financial Needs
An important key, Collins found, is to avoid technology fads and bandwagons, focusing instead on the application of carefully selected technologies.
There’s plenty of whiz-bang tech stuff out there today, and you could spend plenty of time keeping up with it all. Or, you could make sure you’re using the tools that have already proven themselves to be helpful.
For example, one of the most important ways to get and maintain a high credit score is to pay your bills on time. Some ways technology can help include signing up for e-mail alerts that remind you whenever one of your bills is due or setting up automatic bill payments.
Automatic deposits work wonders for those who have a tough time mustering the discipline to put money into their retirement plans or savings accounts.
And, if you want a simple way to track the performance of your investments across multiple investment accounts, technology like Wikinvest can provide a good free solution.
How Technology Can Really Accelerate Your Financial Success
Collins says the companies that made the leap from good to great got the most out of technology by using it to support their “Hedgehog Concept.”
As you may recall, that’s the name Collins gave to one of his primary insights about outstanding companies. They all focused on one thing that they could become the best in the world at and oriented all of their efforts around that single organizing idea.
As we’ve discussed before, a personal finance application of “The Hedgehog Concept” is to identify one thing – just one – that would make the greatest positive difference in your finances this year, and then focus on accomplishing that goal.
How Technology Can Help You Stay On Top Of Your Finances
Is this the year you’re finally going to figure out where your money actually goes each month? There are several free online tools available that will track most of your financial transactions automatically. We use Mint.com.
Sure, it takes a little time to get it set up. You have to be willing to enter your bank and credit card information, and then you need to set up a budget, determining how much you plan to give, save, invest, and spend each month (you may find my recommended spending guidelines helpful). But once you put in that time, Mint makes it incredibly easy to see how you’re doing financially.
Most mornings before I begin my work, I log in, check to make sure recent transactions have been categorized correctly, and manually enter any cash transactions. Then I can instantly see how our actual use of money compares with our plan at that point in the month. I love having that information so readily accessible.
How Technology Can Help You Get Out of Debt
If getting out of debt is the most important goal you’re pursuing this year, use the debt calculator on my site to map out a plan for its elimination. You’ll be able to see how much faster you’ll be out of debt if you pay various extra amounts toward your debts, which can be a great motivator to find the money. Or, if you’re using Mint, they’ve created a new debt tool as well.
What technology do you find most helpful for managing your personal finances? In particular, I’d love to know what personal finance apps you’re using on your smartphone. What other technology are you thinking about adding? Please leave a comment below.
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Other articles in this series on the personal finance applications from “Good to Great” include: