Tuesday, February 22, 2011
Tip #284 - Set It And Forget It. Once you have a plan in place for your finances, it is okay to take a step back and let the plan unfold. You do not have to think about finances for an hour every day or even spend weekends making plans about your money.
If you set up some financial goals at the beginning of the year, along with a budget then you set the stage for a good financial year. If you direct deposited your paychecks (is there any other way these days?), as well as set up money to go into a savings account or to automatically pay off your credit card debt then the process is even better. If you have your bills automatically being paid then you are probably in good shape.
Let your investments take care of themselves. Follow your budget as closely as possible, keep up with your savings and your bills and step back. Then check back in a couple of months to see how everything is going. I like to check in on my finances near the following dates: March 31, June 30, September 30, and December 31. Any more often than that and people tend to micromanage themselves. They overspent one week at the grocery market so they try to fix it the following week only to find themselves with not enough food. Or they watch their mutual funds take a dive one day and transfer their money that only to find the funds have climbed back up the following day.
That's not to say that kinks don't need to be worked out the first time you set a budget. Or that perhaps you are overspending at the supermarket on junk food that you can eliminate. But give it time. One week or horrid spending should not be bad enough to upset your financial plans. Check what you are doing over a three-month period to reevaluate whether you are consistently wasting money or if you truly set the budget too low. For investments, tracking too closely can make you crazy and generally makes for some hasty buying and selling decisions.
Instead trust that what you set up at the beginning of the year is working. Follow it how you planned and then do an evaluation in another month or so. You can make adjustments at that point based on a longer-term financial activities. In the meantime, go out and enjoy your life. You set up your finances to do what you want, so let it go for a short while.
IRL (In Real Life) - Sorry I have been away for so long. I've taken a step back from finances over the past few weeks. I think it began with our beloved rabbi passing away. And I began reevaluating my life and that of my family's. Then my interest in my finances and writing about them on this blog fell further behind with some personal issues. And the more I let it fall behind, the less time I thought about it. Sometimes planning ones finances, thinking about it all the time, reading about it, writing about it, trying to save
money or put away money can become an addiction or take control of ones life.
Of course for someone new to managing their finances, it tends to take over as one learns about saving, investing, and so forth. But once you have the basics under control and have a plan in place for you and your family, it's okay and probably preferable to put them back in their place, taken out to be reviewed from time to time but not to be obsessed with or idolized.
It is healthy to take a step back and let the plans and processes that you have in place for your finances do their work. And then there should be infrequent checkups (I like once per quarter but even semi-annually is okay) to make sure that everything is proceeding according to plan.
I took a break and have been letting the process that I set up take over. I will be sitting down with my taxes in a few weeks and then doing a re-evaluation of our budget and goals at the end of the quarter. But lately, I've been trying to just enjoy my family and our lives. And it has been okay.