One of my favorite financial planning tools (it may surprise you)
One of the biggest business expenses that I have is my financial planning software. It enables me to give so much more to my clients that would be difficult to do on their own. I can run complex analyses, input varying assumptions – such as inflation rates, return rates, spending amounts, etc. to see how they might change the plan – and much more to help clients make informed financial decisions.
But there’s another financial tool that I use that’s just as important, happens to be free and is one of my favorites: my calendar.
Reminding clients when certain money-related tasks are due and holding them accountable is critical and really the heart of financial planning. Without implementation, the plan fails.
And while it certainly helps to have someone like me to remind you to do things, there’s no reason why you can’t schedule them on your own and set aside time to complete them. To get you started, here are some regular financial items to add to your calendar today:
Every 2-3 Years:
Estate Planning: For most people, but especially those with dependents or who have a very specific idea of how they want their belongings allocated in death, drafting a will and other documents such as a living will, health proxy, power of attorney, etc. should be on the top of their to-do list.
However, once they’re in place, reviewing them should be an exercise that comes up once every 2-3 years. Because it’s so infrequent, it’s something that’s easily missed and before you know it, 5 or more years can pass by without the documents being updated properly. To prevent this from happening, schedule it on your calendar with an automatic reminder.
Of course, if there’s a change to your personal life – you have children, your named executor becomes ill, you move to another state, etc. – or if there’s a major change to estate planning laws, you should review your estate plan sooner.
Once a Year:
Items that fall under the annual category could include: 1) Making annual contributions to your retirement plan 2) Reviewing and electing employee benefits 3) Submitting receipts and getting reimbursed for your Flexible Spending Account 4) Checking beneficiaries on your retirement plans, insurance policies, etc. 5) Meeting with your financial advisor to review the year 6) Making appropriate trades in your account for any tax-loss harvesting opportunities 7) Setting an hour or two to file paperwork from the prior year and get organized for the upcoming one.
Quarterly:
Paying estimated taxes tops the list and seems obvious, but it’s also something that’s easy to forget if you’re busy. If you are required to pay, make sure you take the time to schedule this into your calendar a week or so before the payment is due, making sure that the funds are readily available. If you owe a lot, you may want to plan even further ahead so you don’t end up having to sell investments at the last minute (and possibly trigger a capital gains tax at its sale).
In addition to estimated taxes, every 3-4 months get into the habit of reviewing your investments and rebalancing them back to your desired allocation, if necessary. (While you can do this on your own, this is a task that may be easier with the professional assistance.)
Like with estate planning, rebalancing also may be necessary in the event of a change in your personal life or a major shift in the markets; so while quarterly is a good rule of thumb, it may be more or less frequent.
Monthly/Weekly/Daily:
Schedule in time to review your spending and savings regularly. For some, tracking spending may need to begin as a daily exercise so they can get a better handle on where their money is going; for others, this may be more effective as a weekly or monthly to-do.
Daily gratitude: Studies have shown that a daily gratitude practice increases overall happiness and productivity, and therefore indirectly impacts the way you view your finances in a positive way. Experience has also shown us, however, that this is something we may know on an intellectual level, but that we don’t actually do it consistently. To prevent this from happening, you need to put it on your calendar as if it were a meeting and get in the habit of doing it daily.
While by no means exhaustive, hopefully this list of tasks can help you become more pro-active when it comes to your finances.
A simple calendar certainly will never replace more robust planning software; but if you actually take the time to schedule in reminders and then honor those commitments like you would any other important meeting on your calendar, it’s a great tool to get you started!