Recurring steps

The time that you need to spend to keep your finances on track is minimal, but it needs to be regular. Similar to brushing your teeth; you don’t spend hours on it, but you do it every day. With your finances, spending an hour or two every month will help you develop good habits and progress toward your goals.

The following tasks could be done monthly. Unless you really enjoy it, choose one or two each month, so that each one is completed at least four times per year.

Review your goals, to motivate yourself and also to ensure that what you are working toward is still relevant and meaningful to you. Review the progress that you have made toward goals, although sometimes you may be further away due to market declines. Know that you are saving the correct amount of money and paying down the correct amount of debt; this helps set the speed with which you move toward your destination.  To be clear on your current situation, take note of the amount of cash coming in and flowing out. If you have credit cards or charge cards, verify that they are paid off in full every month.

The tasks below can be completed once or twice a year. Your destination rarely changes, and your plan shouldn’t need much modification, as long as you stay on track. Further, certain activities such as monitoring the stock market level, dividend yields and prevailing interest rates, become much less helpful as they are repeated more often. There is always the danger that your finances can steal time away from things that are more important.

Find any opportunities that exist currently: is the stock market level unreasonably low, are dividend yields high, have interest rates risen or dropped? If opportunities have changed, you may want to increase, decrease or refinance your debt, shift investments or increase or decrease risk. Review the financial plan, especially in light of family events: birth, death, marriage, divorce, etc. Know how lump sum goals will be funded, how income goals will be met and contemplate debt funding for each one.

Spending an hour or two a month on your finances can save you many hours of worry. From the lists above, separate the tasks into twelve monthly groups. Then choose a day and set an appointment with yourself for two hours.

More information on each of these areas will be provided later. For now, choose a time and make a commitment to yourself. You should control your money; your money should not control you.