A Financial Dashboard Will Help Steer Your Life


By Joanne Cleaver

Statements, reminders, updates, forecasts and tax returns: All of these financial records proliferate like spring dandelions. As you're tidying up in the aftermath of income tax season, consider creating a dashboard of key metrics. A dashboard organizes these metrics in one place, usually on a spreadsheet, so you can easily track how your financial life is progressing.

Financial advisers say a useful dashboard should have no more than nine categories (or columns) and should be contained to a single page or screen. If you want to add more detail, add additional pages with supporting calculators and documentation, instead of extending the first page of your spreadsheet into infinity. You'll want to categorize your key headers into these buckets:

  • Savings and investments.

  • Debt reduction.

  • Life goals and transitions.

Short-term savings don't belong. By definition, that pot of money is available as needed, and the point of the dashboard is to track long-term progress. Expect to update the dashboard at least a couple of times a year, probably when you have a pile of statements to review. Alternatively, if you have a major life transition, such as going back to work, getting married or you have medical expenses, you will want to adjust the dashboard accordingly.

How to Design a Basic Dashboard

Track how much you are saving and how those investments are growing in two columns, advises Robert Laura, president of Synergos Financial Group, in Brighton, Michigan. "Separate out how much you are contributing and how much the portfolio is growing," he says. "If you are contributing 3 percent, but the portfolio is growing by 4 percent, you only have growth of 1 percent and that's a problem."

Create a separate column for your 401(k) contributions and the growth of your 401(k) account. Park other investments in their own columns, grouped by category (one column for mutual funds, another for alternative investments such as gold, and so on). This lets you see how each category is contributing, so you are less likely to fixate on a certain holding within that category.

Integrate a couple of forecasting tools that can help you project the future value of today's portfolio. One to consider is the CoRi Retirement Index offered by BlackRock.

Tools to Measure Your Growth

"The CoRi index tells you the likely cost of retirement so you can forecast consistently," says Chip Castille, BlackRock's chief retirement strategist. "If you want to spend $50,000 a year when you are retired, how much do you need to save now to achieve that? The CoRi tool can help you determine that. Plug in your savings, the current CoRi price and it tells you how much income it will produce and estimates the total portfolio savings outcome."

Castille also recommends using a Social Security calculator so you can track the likely income from that source, and as well as a subtotal so you can see how it all adds up to regular income after you are retired.

Another tool that can help you estimate what you'll need is the "Choose to Save" estimator, recommended by Joseph Montanaro, a certified financial planner on staff with insurance firm USAA.

Tackling Debt

Most people want to eliminate debt before they retire -- typically the mortgage, although consumer and student debt are also targets for elimination. Watching your outstanding debt evaporate is not only satisfying, but it also helps you see how the overall picture is shifting as you can direct more money to saving once certain debts are gone, Montanaro says. Finally, include a couple of columns for professional and life-stage milestones as your circumstances change.

"If you aspire to entrepreneurship, are you making progress with actually getting clients or customers and making money?" Laura asks. "A lot of people spend a boatload of time creating a business plan, but you don't have a business until you cash a check."

Ramping up a side venture to a retirement occupation takes time, effort and money, Laura points out. "A side business or new business is a speculative investment, and you shouldn't have any more than 3 percent to 5 percent of your portfolio in it," he says. "Don't overspend to start it." When you put your entrepreneurial effort in the context of your overall savings goals and likely retirement income, you can see how much you will need that side income and how much effort it requires before you retire.

If you aim to buy a vacation home, get plastic surgery or indulge in another costly retirement-transition expense, save for that separately so you can insulate your core portfolio from your splurge, Laura adds.

Finally, top off your dashboard with some virtual stickers. Montanaro suggests inserting photos of family members or hobbies in the headers -- "whatever triggers your aspirations," he says, to make your dashboard inspirational as well as functional.