Monitoring Your Progress: Savings
Reflect
In the previous lesson, we went over the three key parts to the portfolio monitoring process. Each week, we will be focusing on a different element to ensure you have a cyclical process you can use time and time again throughout your investment journey.
- Monitoring your allocation
- Monitoring the progress toward your goals
- Monitoring your personal situation for any changes in your life or family status
In this lesson, we will be going over how to effectively monitor your progress in regards to your overall savings. The goal for Lesson 3, is to determine if you have enough saved relative to what you should have saved according to your goals.
The first step is to look at the Prioritizing Your Goals worksheet and interactive Excel sheet from Step 1: "P". We encourage our members to think about three main questions you should ask yourself to determine the status of your savings:
- What is the estimated cost of your goal?
- How far away is the goal?
- How long do you expect to spend on the goal?
You may be wondering, "So, how often should I monitor my progress towards my goals?" The answer will be different for each person; however, we have a few suggestions:
- Generally, comparing your actual portfolio balance against the worksheet once per year should be sufficient
- If there has been a significant change in your finances, you may wish to check more frequently
Participate
As we mentioned above use the worksheets you completed in Step 1: "P" of the PRISM Process to cross-reference to see if you are still on track when it comes to your savings. Now that you've considered the above questions, use the Monitoring Your Progress worksheet which will show you whether you are on track to reach your goal relative to these assumptions.
If the difference between what you have saved and what the worksheet suggests you should have saved, is within the bounds of normal volatility for your allocation, no adjustments may be needed. However, if the difference is outside of this range, you may need to make adjustments such as saving more, withdrawing less or adjusting the timing of your goal.
For this lesson, we encourage our members to download the Monitoring Your Progress worksheet, as well as answer the two discussion questions below.
- In relation to your goals, is your savings to fund your prioritized goals on or off track?
- Follow up: If your savings is off track, how do you plan to get back on track and what actions will you have to take?
Now, we want to hear about your findings! Please share your perspectives in the discussion below.
Download the "Monitoring Your Allocation, Progress and Life Stages" Worksheet
Questions about coursework, webinars, worksheets, etc.? Drop your inquiries in the discussion below. We're happy to help!
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Jenna Brashear
AAII Community Manager
Chicago, IL
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