Five Wise Ways to Spend Your Extra Hour
As the sun sets on daylight saving time, don’t lose sleep over your financial future.
It has been said that time is life’s most precious gift. And on Sunday, November 6, most of us will turn our clocks back and gain the gift of an extra hour – time we can use to do whatever we’d like. And while some may choose to indulge in some extra sleep or check off a task on their weekly to-do list, there may be a better option out there. Instead, consider revisiting and refining one part of your financial plan so that your investment of an hour can pay you and your family long-range dividends.
Should you choose not to “fall back” on the option of extra sleep, here are a few ways to take a closer look at your financial future – all in an hour or less.
Get Your Balance Sheet in Order
To get where you want to go, it can be important to know where you’re coming from. Your financial future is no exception. Before the sunlight fades, update your personal balance sheet (assets versus liabilities, broadly speaking). Use your hour to bring some of those numbers up to date, or, if you’re already well-organized, the hour can be spent refining it.
Review Your Budget and Spending Habits
Try taking some time to review the past few months to see how close you came to what you had planned to spend, where you went off track and what you can do about it in the future. Has something fundamental changed in your life that affected your expenses, and is that a one-time item or an ongoing cost? Where can you trim expenses? Although some budget items are fixed, a sharp pencil can produce significant savings on other costs.
Revisit Your Asset Allocation
It’s important to revisit both your current and ideal asset allocation at least annually and to rebalance as needed, especially since the ups and downs of the market can affect your asset allocation over time. Appreciation in one asset class or underperformance in another can leave your portfolio with an asset allocation and risk profile that differs from what you originally intended. Using your additional hour to tend to your portfolio will also give you an opportunity to determine if you are comfortable with your current level of risk.
Asset allocation does not guarantee a profit nor protect against loss. The process of rebalancing may result in tax consequences.
Check to See if Your Retirement Plan is on Track
Whether the clock is winding down on your time in the workplace or not, it’s important to monitor and manage the various moving parts of your retirement plan on an ongoing basis. Your bonus hour can give you the time you need to determine what types of assets you have, what your cash flow situation is and is going to be, what your contingency plans are, what rate of return you’re assuming, what inflation rate you’re assuming, how long you’re planning for, and all the other important details that go into achieving a successful retirement.
Set up a Regular Review Schedule with Your Advisor
An hour with your advisor can be powerful, especially if he or she has the chance to share specialized tools and the experience earned by dealing with many market cycles and many different client situations. The way you communicate with your advisor is vital too, and that means telling him or her not only what’s happening in your life today, but what’s likely to happen or might happen in the future. Since advisors can’t help you manage what they don’t know about, it’s a good idea to err on the side of over-communicating. Whether you’re anticipating a move across town, a new job, a child heading off to college or otherwise, letting your financial advisor in on the details of your life can help you reach your goals. And that’s something we all have time for.
Material prepared by Raymond James for use by its advisors