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A statement of assets is a good tracking tool to implement. By regularly summarizing your assets and liabilities, you can track your progress. It also helps you visualize your financial life on one page and make decisions accordingly.
If you review your investments every day, it’s probably too often. It’s often said that investments are like bars of soap — the more you touch them, the smaller they get. Some wouldn’t agree with this statement, but most people shouldn’t review their investments frequently. Monthly, quarterly, or semi-annually is probably a better frequency.
When depositing or withdrawing funds, a simple plan for buying or selling accounts or investments can be set quarterly, semi-annually or even annually to take all the doubts out of this process. Ideally, you should aim to maintain an asset allocation that suits your risk tolerance and time horizon, and this generally involves buying low and selling high. In other words, buy more of what’s on sale and less of what’s expensive.
Decumulation — or retrieving the wealth you’ve saved for retirement — can be a little trickier, as there can be tax implications related to withdrawals and the investment you choose. But again, making a rough game plan annually can make monthly payouts or whatever you’re taking in easier to manage.
Reconsider your goals and change course if necessary
There are definitely times in your life when you need to fine-tune your goals. There may be small financial surprises, like car trouble or home repairs, or a bonus at work, or a gift from family. There can be big financial surprises, like losing a job or getting divorced or an unexpected inheritance.
Setbacks are inevitable in your financial life, so it’s okay to go backwards sometimes. The younger you are, the easier it is to recover. But even when you’re older, it can be easier to deal with those occasional setbacks if you’re conservative enough in your spending and saving and anticipate those occasional setbacks.
People often prepare budgets that don’t include car repairs or maintenance costs. Factoring unexpected expenses into your budget can be a more sensible way to plan for both the short and long term. If you want or need to monitor your expenses, there’s no shortage of budgeting apps to suit your style.
Make it a habit to check your progress
In addition, set reminders in your calendar. The end of the year is a good income planning prompt for retirees, business owners and those with unregistered investments. The New Year is a good time for TFSA and RRSP contributions. Spring is tax time and ideally you should have your tax papers ready by mid to late March so you are not in a hurry at the end of April.