Posted by André Nosalsky :: December 4, 2007 @ 10:18 am

In my previous article, I talked about defining and setting goals when undertaking your Money Marathon. Another key aspect of preparing for your Money Marathon involves understanding your starting point.

When getting ready to train for a marathon it is wise advice to visit your doctor for a checkup and receive an assessment from a physical trainer to get a clear picture of your current state. You do not want to set yourself up for failure by signing up for a long and exhausting marathon when you are only in shape for a 5,000-meter run, or just a long walk. The same idea applies to your Money Marathon.

Before you set off racing to make millions, it is wise to find out your current financial health and fitness level. This will insure that you do not overwhelm yourself and totally quit on your goals. You do not want to be too overly optimistic, so it’s best to start off with conservative goals, and if they prove too easy you can increase them incrementally.

Money is a very tricky matter, and most people are not good at judging their spending and management accurately. That is why it is best to track your spending, saving, investing and other money decisions and habits in a written format or electronically, and not in your head.

Here is what you should track and review on a regular basis:

1. Personal Financial Statements – This includes your income/expenses and assets/liabilities worksheets. To start, you should download this personal financial statement (Excel work sheet) from SCORE. Just like you would constantly monitor your physical training times and activities, you should do the same with your financials and update them on a regular basis. Monthly is best.

2. Expense Tracking – Do you know where you are spending your money? Are you getting the best return on your investment? The only way to know for sure is to keep track of where your money goes and then look at what you can cut and where you can save. A service that can help you do this automatically is Mint.com.

Set small goals. If you cut your monthly bills by $150 and automatically put that money into a savings account or lend it out in p2p loan portfolios on Lending Club, you can go out and celebrate with a nice dinner. This will help you reinforce this type of behavior within yourself.