With a new year starting, many people take time to not only reflect but also start planning and setting goals for the future. As we imagine what the future holds, it is natural to feel uncertain. Trying to map out a financial plan for an entire year can be daunting, especially with the likelihood of unplanned expenses always looming.
Years ago, I found a method of easing that anxiety. I began an annual update of my family’s finances at the turn of each year. Right after Christmas / just before New Year’s Day, I updated our household’s net worth. This practice has allowed me to get a more detailed picture of how my family spends money, how our needs may have changed over time, and what we can do to stay more organized moving forward. Since I started, the process has been easier each year because we are always building on an existing foundation rather than reinventing the wheel.
My Annual Review Addresses Two Questions
- First, is my family’s net worth higher than it was a year ago?
- Second, is our current net worth on target for our long-term financial goals?
Taking a look at the big picture allows me to see the finer details. I examine how much we earned over the past year. Then I look at how much we saved from those earnings. Having a grasp on our investments helped a great deal, too. I researched to what extent the value of our investments increased or decreased. If your family is paying off debts, it is wise to get a picture of how much interest you’ve paid on them in the past year, as well.
This may seem like an exhausting financial survey or a daunting task but having discipline in this analysis can help you to have discipline in your financial behavior through the next year. The first few times I did this exercise, I wrote it all down with pen and paper. Over time, I moved my work to a personal finance website that aggregates my accounts and makes it easy for me to see all my financial holdings at a glance, making the process much more turn-key. Putting all the information online allows me to get daily updates about my account values, too, so that I don’t have to wait for an annual time point to assess our net worth and financial picture.
If you’re interested in conducting this kind of net worth assessment for yourself or your family, email me here. I’ll be happy to get you started on this path for the new year so that you can take greater control of your financial well-being.
One way to take control of your financial health in 2020 is to open a MAP account to house your growing investments and add discipline to your financial routine by automating your investment habits. When you open an account with MAP, the first thing you’ll click is Get Started. MAP is meant to help you do just that: set your path and achieve your goals – whether you’re focused on something in the short term (like saving up for a down payment on a house) or already thinking ahead to retirement.
This new year, I encourage you to Get Started on your financial journey. Financial stability and improvement are well within reach, but it does take work and focus to get there. The invigorating spirit of the holidays and the new year can be a launching pad for your family’s monetary success. I wish you the best in your endeavors this coming year and look forward to hearing from you about how your New Year’s financial resolutions are developing.