This is the time of year when we’re past the post-holiday season recovery, spring cleaning is on the mind, and maybe the tax return is even filed. Oddly enough, spring cleaning and tax season can serve as a useful reminder to pause, reflect on recent financial progress, and realign.
You might wonder, “How can I track progress?”
A simple start can be creating a personal financial statement. This document should capture all assets (liquid and non-liquid), as well as any outstanding liabilities, to arrive at net worth. Getting into the habit of updating this information on at least an annual basis will help you feel confident as to which direction you are moving in financially.
This “direction” involves much more than the question “did overall amount increase or decrease?” It can provide insight into such things as the amount of liquid assets versus non-liquid assets or areas in which we could use debt as a tool. This seemingly simple document can highlight the planning opportunities we navigate alongside our clients.
Planning opportunities frequently prompt analysis, recommendations, and a plan for implementation. This process may further develop into an opportunity to ensure you have a strong team of key professionals (financial advisor, tax advisor, legal counsel, etc.) working collaboratively. We’ve found it is often valuable for us to serve as the “quarterback” among a team of advisors, simplifying the process for clients.
But perhaps the most critical reason for monitoring progress and identifying “direction” and any planning opportunities, is because it leads back to the heart of financial planning: your goals. Taking even just a little bit of time each year for a checkup on our financial health, creates intentionality around whether decisions are aligning with goals. This process may lead to realization that adjustments are necessary and these adjustments, while uncomfortable in the short-term, are often critical to progress.
Crafting a net worth statement can ultimately lead to bettering our situation and advancing our strides towards a greater cause. While organizing your financial life positions you in command of your next moves, it also reminds yourself of the progress you’ve made. That alone makes it an extremely valuable exercise.
The content of this article is developed from sources believed to provide accurate information. The information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. All expressions of opinion are subject to change. This content is distributed for informational purposes only, and is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products or services. Past performance is not a guarantee of future results. Index performance does not reflect the expenses associated with the management of an actual portfolio.