Each year as tax season comes to a close, I receive questions from clients resolved to make a fresh start by “cleaning up their finances.” In response, I have developed three spring cleaning tips for people eager to tidy up and for those that require a little more prodding to get their finances straightened out. The tips are not short term fixes but, rather, were designed to provide a lasting sense of order and serenity.
Tip 1: Know Your Goals
Midway through tackling a closet brimming with outdated fashions and years of accumulated junk, your normally neat bedroom looks like a tornado just hit. Boxes for the attic or Goodwill are stacked in every corner and stray shoes compete with hangers and dust bunnies for the remaining space on the floor. Without a goal in mind, the scene is pure chaos. With determination and follow through, though, by the end of the day, the closet is immaculately organized with each shoe, belt and shirt in its proper place.
Having an investment strategy without clear objectives is much like standing in the messy bedroom with no idea of how to get things cleaned up. The chore at hand appears overwhelming, and you are not even sure whether your efforts thus far have made any difference.
Knowing the endpoint and having a clear plan of action are crucial if you want to achieve any major task, and your personal finances are no different. If you want to measure the success of your investment strategy, you must have a final destination plotted out in order to determine how far you have come and how far you have left to go. Setting goals also allows you to stay focused when the work ahead is difficult and the temptation to quit strong.
Need help articulating your goals and developing a route to achieve it? We’ve developed the Fortier Finacial Guiding Philosophy Statement™ (GPS) to help. Just like the GPS in your car or on your smartphone, this proprietary tool will help you determine where it is you want to go in life and then map out the directions on how best to get there.
Tip 2: Make Sure Your Spouse Is on the Same Page
You may think your spouse will be pleased with your new found commitment to cleanliness, but if you throw out his or her favorite sweatshirt, no matter how shabby it was, you might be in for a reprimand instead of the praise you expected.
Likewise you need to make sure your spouse is on the same page before undertaking any major financial decisions. While discussions about finances can be touchy, it is critical to have them for two reasons: for one thing, your spouse deserves the opportunity to offer input, and secondly, any changes in spending and saving habits are unlikely to be successful without their support.
Tip 3: There Is No Time Like the Present
Maybe you are one of those people who have not actually started your spring cleaning yet. If you need a bit of encouragement, when it comes to your finances, the old adage, “There is no time like the present,” could not be truer. Whether you are worried about mounting debt or inadequate savings, putting off necessary changes will only make the situation worse further down the road.
Now is the time to take a critical look at your financial plans for the future. Like a house in need of a thorough cleansing, the task may seem daunting at first, but the peace of mind that comes with having your affairs in order is well worth the effort.