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Designed Order in 3 Steps

If the old tyme saying that cleanliness is next to godliness is true, then orderliness can’t be too far behind. 

Financial orderliness can relate to cash-flow and portfolio construction.  

I think that everyone needs a budget - but how specific it needs to be depends a lot on individual personalities.  I personally use YNAB and track every single penny, and it works well for our family.  On the flipside, there was a great post this week by Dan Egan on how he doesn’t track his spending really at all, but his order system is intentional and smart. 

From an investing standpoint - it’s alarming to me when I see portfolios with 10, 15, or 30 different investments.  Do we know what each of those investments is seeking to accomplish?  How do they relate to each other?  How much overlap is there between them all?

The first step to getting things in order is quantifying the “What” - look at our bank statement transactions, our credit card statement, our individual positions in our portfolios.  What is there?

Next ask “How” - how did that money get spent?  Was it intentional or did we not even think about it?  How did we end up owning this fund?  

Now ask yourself the “Why?”  Why did we spend that money?  Why do we have this investment?  

Hopefully, those Why answers line up with our values and goals.  And if they don’t, then we work backwards from How to What and make the changes needed. 
Interesting Resources 

1. The Daily Brew (daily email newspaper)
While on a regular search for quality journalism that’s not sensationalism or click-bait, a mentor of mine shared The Daily Brew with me a few months ago.  I signed up, and have been really impressed.  It’s a free subscription daily email that gives you a daily rundown of what’s going on in the world in a nonsensical yet comical fashion.  It tilts more towards economic and business news, and I’ve found it to be a great tool to get a quick update.  Full disclosure: if you sign up from that link I might receive a sticker or perhaps even a coffee mug for sending you that way (I take being a fiduciary of disclosing conflicts of interest seriously!).  

2. Dimensional Fund Advisors - Forecasting (video, 2 minutes)
It’s that time of year when both the TV pundits and your brother-in-law are all making market projections for the coming year.  Dimensional’s David Booth puts out a reminder that with over 90 years now of US market data, we have a pretty good idea of what the stock market is going to do - it’s going to go up, and it’s going to go down.  Just how much, or little, we don’t know.  But a 9-10% average rate of return is reasonable to expect over a long enough time period, regardless of economic or governmental situations.  Good reminder to tune out the noise. 
What’s an area in your financial life you feel nudged to bring better order to?  I’d love to hear it, and see if I can provide a few resources.

Gratefully,
Jeremy
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