You wouldn’t only exercise once per year if you had a goal to become healthier, you wouldn’t only read one article per year if you had a goal to learn about something, and you wouldn’t only write one day per year if you had a goal to finish a book. You shouldn’t only pay attention to your personal finances once per year if you have goals that require money to achieve them. Life is busy and can change quickly – the same can be said for your personal financial situation. Not being intentional with your resources on a consistent basis can lead to lost time, lost ability, and lost opportunity.
Your financial life doesn’t change only once per year so you shouldn’t only pay attention to it when you’re setting your new year’s goals or when your financial planner tells you it’s time to update. A financial plan is a living, breathing, changing part of your life that requires consistent attention to fully develop and produce the results that you want it to. A good financial planner should keep in contact with you throughout the year to help ensure that you’re accomplishing the things that you need to so that you can reach your goals. If you don’t work with a financial planner, then it’s up to you to keep yourself accountable to revisit your personal finances frequently, make sure that you’re on track to meet your goals, and adjust as needed.
Be Proactive
So many things happen over the course of a year that, even though they could be huge life events, sometimes we don’t even consider how they could affect our financial lives or take the time to consider how they have affected us after a while – receiving a raise, buying a new home, having a child, etc. These things are all part of life, but we don’t always take the time to plan for how they will, or have, impacted our financial situation.
Being proactive about planning for life events that you know are going to happen, such as buying a house or having a child, can save you a lot of heartache in the long run and ensure that you’re on track to reach your goals. However, setting goals to save X amount of money for a down payment on a home and obtaining adequate life insurance coverage this year is likely to be ineffective if you don’t check in on your progress towards those goals until the end of the year. Tracking your progress and adjusting as needed on a consistent basis will lead to you being much more likely to achieve the things that you want to.
Life Happens
You never know what life’s going to throw at you next. Not only does revisiting your financial plan often allow you to plan for the long-term, but it also helps you plan to absorb short-term catastrophe as well. This week, many well-respected journalists at the Indy Star were laid off. I’m sure many of them never thought they’d be in this position and, unfortunately, I’m sure that many of them weren’t prepared to be unemployed.
At a larger level, the federal government has been shut down for over a month now, leaving government employees without paychecks. Regrettably, the statistics tell us that the vast majority of these workers weren’t prepared for not having a paycheck, let alone going without multiple. In 2018, the Federal Reserve Board issued a report that stated that 40% of Americans don’t have enough liquid cash to cover a $400 emergency. While this number is decreasing, it’s still far too high and shows us that many of these people who have lost their jobs and gone without paychecks likely didn’t have a plan in place for situations like this.
Although I don’t want to make examples of these gravely unfortunate situation, I hope that this shows why it’s so important to revisit your personal financial plan often. We can all say, “it won’t happen to me”, but the reality is that it very well could happen to anyone. What’s your excuse for not making sure that you’re taking care of yourself, your family, and your future self? Proper planning and evaluation of your personal finances on a consistent basis can not only help you to be prepared for catastrophes, but can also help you to leading a happy, successful, and prosperous financial life.
