Personal Finance Score

I’ve been wanting to write about this for a while, but now that I have added it to my wealth tracking (see Net Worth), I figured it was time to stop dilly-dallying. (I know, it’s actually spelled that way!)

I was introduced to this score over at Save.Spend.Splurge, who credited it to J Money and Jly. They all speak of it as an alternative to the FICO and typical Net Worth trackings used.

I personally plan on using it alongside my net worth. Currently, I stand at .48, which isn’t terrible, but if I had been a bit stricter with my budgets, I could’ve been much higher at this point. Since I started using Mint.com a few years ago, I’ve spent thousands of dollars on extraneous things (primarily food, to be honest) that could’ve been saved or invested.

This year I will reach $10,000 in net worth regardless of what the market does, but its disappointing to know that I could’ve been there so much sooner had I just buckled down a bit more. This new score motivates me as it shows where my assets are if something truly detrimental happened.

I currently have a high enough net worth that I could survive for six months without anything. That’s actually surprisingly comforting. Do I ever want to have to do that? Not a chance! But it’s helpful to see the other, less obscure number.

It’s kind of like the 4% withdrawal rate in a more personalized setting. Once my score is 25, I can supposedly commit to a 4% withdrawal rate and retire. Whether or not you believe in the 4% or 25x rules, this is just another metric to motivate individuals to save enough for emergencies and eventually retire.

What systems do you use to track your progress and to motivate you?

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