Each week, I spend about two hours working on my finances. In that time, I complete a fair value estimate of the market, compare the relative momentum of various asset class (representative ETFs), all constituents of the TSX 60, calculate performance of my accounts relative to the market and check my bank account balances and automatic payments. Then, if I feel it’s timely to make a trade in my accounts, I’ll spend a little more time on that Monday morning.
Not everyone needs to do all these things. In fact, most people could manage their personal finances quite adequately in about half an hour each week. There’s no reason, really, to be looking at your finances weekly if you don’t manage your own investments. I need to check my bank account once a month to ensure there’s adequate cash to cover automatic payments like my credit card bill.
I also spend a little extra time at the end of each quarter, producing personal financial statements. I create an income statement, a balance sheet and a couple ratios. These give me a very clear picture of how much we’re spending, how our investments are performing and whether or not we’re taking more risk than necessary.
It only takes a little time each week. Sometimes, I don’t look forward to doing it, but I am always happy to have a clear picture of how we’re doing financially. Of course, there’s so much more to life than finances, but if we don’t get the money right, it could derail everything else.