This is a re-post of a previous article – I think its a good way to look at your new year planning.
So it seems everyone has their own method/ideas for closing out the old year and starting the new one. There are “new years resolutions” and lists of financial and personal decisions to review and update. I find this time of year fascinating on the FIRE blogs, because you really get a chance to see where people are, how their decisions throughout the year “panned out” and what their thoughts on for the new year. Hopefully you’ll write and share yours.
For me, I typically start out my review where I’m most comfortable – the numbers! As an engineer and a FIRE guy, I enjoy looking at my spreadsheets and investments to see where I am and to plan for the future. So what do I do with my finances?
- Update Investment status: I track my investments monthly, and at the end of the year, I determine, for each investment, its overall growth and its percentage in my overall portfolio.
- Calculate dividends: I also take the opportunity for each investment to determine its dividend yield and the amount of “passive” income it has thrown off. I use this for planning the potential for retirement income in the future.
- Individual Investment Performance: Determine if I need to sell/buy new investments, based on performance.
- Updated Net Worth: Adding all of this together with my real assets (home, cars, side hustle) and our liquid assets (checking & savings) I determine our net worth, and the growth of our net worth in the past year
- Determine rebalancing moves/stock sales & purchases: Finally I look at each investment and what its overall percentage is in the portfolio – and then determine if I need to buy/sell items to bring everything in line (I also rebalance in the middle of the year).
With all this done, I have a better idea of where we are financially, and where we are in relation to our goals.
At this point, I turn to the “softer” items on my new year review
- Review previous years goals: In addition to financial goals, I’ve got a long list of goals that I was working on (fitness, reading, traveling, visits to family, etc.) I try to put real numbers or performance measures on each, so I can actually grade myself on accomplishing/not-accomplishing them.
- Review 5-minute journals from past year for insight: Like so many others, I use a journal on a daily basis to write about my thoughts and feelings (I use the five-minute journal). I go back and review my writing for any insights.
- Go through “Year End Review” list of question: I have a “year end review” list of questions I picked up from my reading that I do at the beginning of the year, that I reflect back on weekly. The idea is to answer these questions and reflect on them
- Identify 20% of people, projects or ideas which provided 80% of enjoyment/powerful emotions for 2018
- Identify 20% of people, projects or ideas which provided 80% of stress/pain/powerful emotions for 2018
- Try and spot patterns from #1 and #2; Determine action steps to increase #1 and reduce #2:
- Identify Three things to add to my life
- Identify Three things to remove from my life
- Ask folks close to you, what you should do more of and what should you do less of?
- Start putting stuff into the calendar. If it is on the calendar, we will do it
- Questions from “Happy Money”.
- For Purchases, “how will this affect my use of time”
- “How will I use this thing on Tuesday night”
- $100 to most increase happiness?
- $500 to increase happiness?
- $1000 to increase happiness?
- Take 20% of liquid cash, how would you apply it to increase your quality of life?
I then set new goals for new year: Based on all this, I go and set new goals for the year, and then post them where I can reflect back on them regularly
So what do you do for your year-end review?
Mr. 39 Months