Whenever it’s my privilege to speak to young dentists, I advise them to complete an updated personal financial statement each year. Doing so serves three major purposes: It provides a “global” view of your financial status, helps you track your progress toward personal financial goals, and serves as a valuable source of information for your survivors in the event of an untimely death.
This can be done at any time of the year that’s convenient for you, but should be completed at about the same time each year so that you are reviewing changes to your financial status during the past twelve months.
As a small-business owner and the father of three daughters, I found it very helpful to compile these annual statements in a simple three-ring binder to help identify my financial trends. Such information helped me make more appropriate investment decisions, whether they impacted either my practice or my family. Not only did this make me a better businessman, but it made me a better dad as well (Do we add another digital sensor to hygiene, or put in the family pool?)!
It’s widely accepted that writing down one’s goals increases the likelihood of realizing them. Reviewing your financial status annually reveals your progress. Importantly, the mere process of accumulating the necessary information may cause you to refocus on your goals, and “recalculate” as needed.
Finally, appreciate that any family death is devastating to the survivors, but one that is completely unexpected can leave family members desperately searching for critical financial information during an emotionally-charged time. An up-to-date personal financial statement revealing your assets, debts, investments, and contact information can be invaluable.
Completing your first PFS may prove to be tedious, but it’s well-worth the time. Once done, however, it is relatively easy to update each year. And note, it’s never too early to start!
“The greatest thing is this world is not so much where we are,
but in what direction we are moving.”
Oliver Wendell Holmes