Charting my finances for over 30 years has taught me a few things.

On its own data is potentially interesting, yet without context and understanding it is uninformative.

Data plus knowledge creates information. The more you know, the more useful that information may be.

Information without analysis fails the “so what?” test. The winning lottery numbers match your ticket. The zombie apocalypse has begun. So what? What does that mean? What do we do about it?

Analysis without action reads like the underachieving student’s report card: “capable of great things, if only they applied themselves”.

A great deal of action is taken just to be seen to be doing something. However it is often no more productive than watching a sugared-up toddler act out the tax code via interpretative dance.

The question is: did things get better or worse as a result? Was that outcome verifiable and repeatable, or just a coincidence?

Measuring and monitoring allows us to assess the effectiveness of our actions, and learn from them. What should we do more of? What should we do differently? Is there anything we should we stop doing entirely?

This collection of charts helps to keep me honest about the progress of my own financial journey, tracking where my money comes from and where it goes.

The measure of wealth is time

I define the point at which I had “enough” as being when paying the bills no longer determined how I chose to invest my time.

Investment income grants the ability to exchange those things I used to have to do with things I choose to do.

My investment income does not yet cover all of my living costs. Until it does I choose to work full time through the cold wet London winters. This frees me up to be a man of leisure for the remainder of the year.

Time is bought with money

The ability to play when the sun (hopefully) emerges from hibernation is provided by the free cash flow generated by my investment portfolio.

In my experience investing wisely has a greater impact on increasing net worth than saving surplus cash flows.

That said, investments don’t always increase in value!

Diversification across asset classes, geographies, jurisdictions and providers is an important consideration for reducing risk. As a (mostly) reformed stock picker, I have found low cost index funds also reduce risk… though I still like to dabble on occasion!

I believe that using debt to fund investment purchases can be a powerful tool, but only when the income produced by those assets more than covers the borrowing costs.

Made round to go round

Spending money on crap I don’t need has never been my thing.

However I am a firm believer in maximising earnings potential by investing in myself, rather than doing without.

For mine, frugality is not the path to happiness and contentment.

Over the years I have established a diverse set of passive income streams.

These income streams have grown to cover my lifestyle costs one at a time. It is a great feeling knowing I should never need worry about how I will pay for things like the electricity or groceries again!

While those passive income streams grow at a faster rate than my lifestyle costs, it feels like winning.

Which is how I find myself at my current location on my financial journey.

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