Do You Have Time to Think of Your Financial Plan?

by Miranda Marquit · 2 comments

balancing money
I recently attended a young professionals networking event with a professional development presentation on money management. This was a great presentation (as a money nerd, and someone who makes a living writing about it, I was riveted), and it brought up an important consideration:

How much time do you make for your financial plan?

The presenter, Eric Hess, pointed out that most people spend more time researching their next TV purchase than they do planning their finances. When you think about this, it suddenly doesn’t seem so odd that many of us have a hard time managing our money.

It’s never a bad time to step back and think about what you want from life, and what you will do with your money to get there. Here’s what you should do.

Break It Down

As with all things in life, everything seems more manageable when you break it down. You don’t have to sit down and create your holistic financial plan in one go. Instead, break it down into tasks. Start out by deciding what you want your life to look like. Take half an hour. You can create a life map, jot down a few ideas, or just decide how you want to handle retirement. On another day, you can take another 30 minutes to figure out where you stand. What are your expenses? Where do you get your income?

You can track your expenses fairly easily with the help of any number of personal finance apps. Mint, YNAB, Moneydance, Quicken, Personal Capital and others can provide you with a way to see exactly where your money is going. Take the time to set up the software. I don’t like pulling automatically from my accounts, but many people like doing so because it is convenient. No matter how you do it, take the time to set up a system that helps you track your expenses so you know where your money is going.

Other tasks that can be used to help you with the financial planning include:

  • Prioritize your expenses (once you know them).
  • Set up an investment account. Online discount brokers are easy to use, and robo-advisors make it easy to start an investing plan.
  • Use a calculator to figure out what you need for retirement or to reach other goals (I started a travel fund last summer)

In the end, tasks are easier to manage if you break them down into smaller chunks of time. When you get your system set up, it takes even less time to stay on top of your money management.

Sunday Evening Money Management

I have a standing appointment with my money. Every Sunday evening, I spend about 15 minutes entering receipts from what I spent during the week, and looking ahead to see where I stand (which bills are automatically coming out). I quickly scan my accounts online to catch potential fraud too.

Then once a month, I spend an hour reconciling my accounts. Twice a year, I review my asset allocation and make sure it’s on track. That takes me about 15 minutes, because, as an indexer, not much changes for me. Any adjustments are also very easy to make since I use ETFs in my portfolio in addition to more “traditional” index funds.

In all, I spend about two hours a month managing my finances, and an extra 30 minutes a year with my asset allocation. It took a little longer to get things set up, but that time investment has paid off because I’m on track to meet my financial goals.

Editor's Note: I've begun tracking my assets through Personal Capital. I'm only using the free service so far and I no longer have to log into all the different accounts just to pull the numbers. And with a single screen showing all my assets, it's much easier to figure out when I need to rebalance or where I stand on the path to financial independence.

They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it's free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.

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{ 2 comments… read them below or add one }

Jordan February 6, 2016 at 4:53 am

It’s the monster in the closet. Nobody wants to look at their finances, because they are scared of what they might see. They don’t want to sit down and figure out a budget because they are afraid that they might have to live by it. The truth is, is that the unknown is much scarier than the known. If you actually do sit down and check out your finances I think you’ll be surprised that it’s not quite as bad as you expected. No matter how bad it is you at least know all the details and you can make a plan to get out of it. Start by making a simple budget. If you need help starting a budget check out this link bit.ly/1QI8FRj

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David Ning February 6, 2016 at 9:52 am

I never get why people are scared to make a budget because they are scared to see the details, but it’s true that they do. The beauty of knowing is that the worst the budget is, the more fat there are to easily trim. Once anyone gets to see what they are spending on, then it’s relatively easy to cut a chunk out without affecting their lifestyle at all.

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