My Personal Finance Toolbox – FRED

I’m starting a series on tools I have in my personal finance toolbox. These are the tools I use either daily, weekly or monthly to make financial decisions. If you wonder how I have time to use these tools, write this blog, and focus on my investments, the answer is easy. I often multi-task and don’t waste time on trivial things and outsource mundane tasks.

FRED

If you’ve ever seen any charts, tables or other data on this blog there is a good chance the data, at least part of it, came from FRED. What is FRED you ask? It’s not some guy I know or a friend but a tool available from the St. Louis Federal Reserve.

First, let me tell you that there are a few different Fred tools. There is a mobile app that can provide access to the data and create charts and graphs. You can find that tool here.

Second, and more importantly, there is another FRED tool that is a plugin for Excel. The plugin allows you to type an entry and then download the data for that series. The advantage to using the Excel tool is that you can manipulate the data and combine it with other data sets to build different data sets and analysis.

Third, there is yet another tool that is an API (Application Programming Interface) for tech gurus to pull data directly into other systems bypassing Excel. I don’t use this tool because I’m not a programmer but if I had the skills, I would probably use it too.

One Brick At A Time

If you’re not sure where to start, I would recommend downloading the FRED app for your IOS or Android phone. Where do you start once you have the app?

When I spend time on the app the data I download is to review inflation, unemployment, and interest rates and here’s why….

Inflation – The most sinister thing in your life is inflation. Inflation is a thief picking your pocket EVERY DAY. In the ever growing battle between “spend less than you earn” and “earn more than you spend” the reason I focus on “earn more than you spend” is because if you don’t earn more you will automatically grow poorer over time.

Unemployment – It’s important to monitor the health of the economy and nothing does a better job than monitoring employment levels. If you don’t want to be caught by surprise getting laid off from your job, try paying attention to your company’s financials but also what’s happening to everyone else’s financials.

Interest Rates – The Federal Reserve sets baseline interest rates for all banks. If you are expecting to borrow money for a home, student loan, business idea, or even your credit card, the interest rate will be dependent on what the Federal Reserve does. Credit card rates are approaching 30% interest now and the core reason is because the Fed set rates up 525% over the last few years to fight inflation.

It’s not just you and I that are dependent on these things, every business also is impacted by these three key things. There are many other uses of the data but to write about it all would turn into a castle’s worth of bricks and we’re trying to do things one brick at a time.

I tried to find a more recent video of how to use the Excel FRED plugin but the video below is the only one I could find. It’s a bit dated but the plugin works the same way.