I want to begin on a personal note. Recent months have seen us enter uncharted waters, personally and financially. While the nature of print publishing does not afford me the opportunity to speak directly to issues as they develop, I firmly believe that sound financial principles and taking a long-term view of your investments is the best route to meeting your financial goals.
In that spirit, it IS springtime. Now is an ideal time to take stock of your financial situation, and your debt in particular. Here are a few simple steps you can take to clear your financial clutter and enjoy your summer.
Take a closer look at your spending
Did that free trial you never used become a monthly membership you never use? Do you find yourself surprised by your online impulse buys on your monthly statement? People talk a lot about budgeting, but setting a budget doesn’t matter if you don’t know whether you’re sticking to it.
There is a simple solution. Start tracking your spending in real time. Write it all down, from groceries to monthly car payments, to supplies for your home office. From there, you can compare and contrast with your budgeting goals. You’ll think twice about hopping on Amazon before bed.
Organize your statements and bills
It’s time to do some literal spring cleaning. Organize credit card statements, bills, invoices etc…
While you are at it, take this time to review your statements for recurring payments and questionable charges. Look for patterns. Do you have a daily spending habit that is really adding up? Sometimes it helps to visualize your spending.
Finally, if you don’t need your documentation any more, go ahead and shred it. Shred old pay stubs and old bills that have long since been paid. Having more clutter makes it difficult to practice the visualization I recommend above.
Rebalance your portfolio
Given the volatility we have seen throughout the year, it is very possible you are overinvested in certain assets. This leaves you vulnerable to market swoons down the road.
Take this time to ensure your investments are properly diversified. This means asset diversification, certainly, but also tax diversification and risk diversification. Aiming for diversification will have the added benefits of tempering the impulse to panic and helping you focus on your long-term goals.
Get your advisor to help
It might seem counterintuitive. Shouldn’t you get organized BEFORE you meet with your advisor?
The truth is, though, that your advisor is part of the cleansing process. Organizing your finances in accordance with your financial goals is their job. A seasoned advisor can help you budget, prioritize spending and rebalance your portfolio.
A meeting with your advisor would be especially prudent in light of this year’s volatility. Having a clean financial slate requires peace of mind, and your advisor can help keep you calm amid the spring storms.
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Series 7, 6 & 63 Securities Registrations,1 Series 66 Advisory Registration† Robert joined Wealth Enhancement Group during the 2019 partnership with Planning Solutions Group, where he was a Managing Partner for the firm. He specializes in providing comprehensive financial planning strategies, with an emphasis on estate preservation, business succession planning and asset management. Robert has been a featured speaker at many industry events and is a trusted partner...Read More