Summer is over and it’s back to school and getting back to a regular routine. As a father of four young boys, the summer is a time when we stay up a little later and the kids can sleep in as a result. But now with school back, it’s important for us to get the kids back on to a regular routine. I think routines are essential not just for the kids but also for the parents. In fact I think most people need some routines in life. Routines are like habits. They are things you do over and over again without really thinking about it. Routines can make life more comfortable.
What are your current financial routines?
Take a moment and think about your regular financial routines. Do you have a system for paying the bills? How about going to the bank? Do you actually go to a teller and talk to the same people routinely? How do you check your bank account? Do you have any routines with regards to your investments? Do you check your investment account balance regularly? Do you have a system to review your investments? Are you in a routine when it comes to updating your net worth statement? What about your financial routines around budgeting or spending?
It’s important to assess your current financial routines and think about whether they are good routines or bad routines. The routines that come to mind first are likely habits that are subconscious. In other words you just do them because you have trained your mind and body to do these automatically. These routines play a big role in your financial success.
Identify new desired routines
Once you understand your current routines, the next step is to see if you have any financial issues that you want to address. The best way to address them is to develop a productive routine around solving the problem. I’ll give 2 common examples I see with people.
1. Julie has a spending problem and she is constantly over spending. She needs to come up with a solution that breaks her routine of shopping or developing a new routine that helps her break the old routine. Every person is unique and different so it’s difficult to solve a problem with a specific universal solution but here are some ideas for Julie:
- write down everything she spends and once she reaches a dollar threshold, she has to stop spending. The routine is for Julie to write down everything she spends.
- another routine is to take up a new hobby that keeps her busy and prevents her from going to the mall and spend money. Developing new healthy routine might distract her from her old unhealthy routines.
- Cut up the credit card is an example of a strategy to break the old routine. We live in a society where it is so easy to spend money we do not have. Cutting up the credit cards may help to reinforce this common problem of overspending.
2. Ned is a decent saver and has accumulated a portfolio that he has neglected for many years. He has realized that he now has about $150,000 saved up through his Group RRSP plan at work and has never really paid any attention to the portfolio. Ned wants to get into a routine of checking his investments more frequently and developing a strategy to improve returns.
Ned’s sister Nancy had a routine that she shared with Ned. Nancy was checking her portfolio once a month and inputting the values into a spreadsheet so she could see how her investments changed over time. By doing this with her portfolio and she was able to tell him exactly how much money she had and which investments were performing better or worse than others.
Ned thought this was a great idea and committed to the financial routine of scheduling a time in his calendar to log into the company website and look at his investments at the end of every month.
Routines are an important part of your financial success. Having good routines creates more engagement and awareness about your money. The better your financial routines, the better your finances will be. Remember, the more you take care of your money, the more your money can take care of you in the future.
Will your routines change in retirement?
Retirement is a different phase of your life and as a result sometimes the financial routines you had while you were working may not be the best financial routines to have when you are retired. Remember your goals change, your needs change and as a result, your financial routines may need to change accordingly. The process of developing routines for retirement may not be that different. First establish what your current routines are and determine whether you have good financial habits or bad financial habits. At the same time figure out if these habits need to change in retirement or not.
What financial routines do you have and which ones do you think play a role in your financial success? Which financial routines might change in retirement?