By Robyn A. Friedman
City & Shore Magazine
Clutter – ugh. You’re probably dealing with the aftermath of the holidays now – empty boxes, excess rolls of wrapping paper, piles of papers you need to catch up on.
Clutter is ugly, and it creates stress. Eliminating the mess may take time, but the payoff makes it worthwhile.
The same goes for your finances. That’s why it might be a good time to follow Marie Kondo’s advice and get rid of things that don’t “spark joy” to live a simpler, more tidy life.
“With the new year, you get a fresh start to get your financial life in order,” says Michael Silver, a certified financial planner with Baron Silver Stevens Financial Advisors in Boca Raton. “But, just like the typical New Year’s resolutions, such as weight loss and exercise, getting your financial life in order will also require some organization and discipline.”
There’s a lot you can – and should – do to organize your finances to not only make life simpler today but also to ease the transfer of assets to family members upon your demise. Experts suggest the following:
- Create a budget. First, list your assets, liabilities, income and expenses. Then, put together a budget to better understand where your dollars are going and to get a handle on expenses.
- Reduce debt. Review all debts to determine the interest rate you are paying. Explore ways to reduce the interest rate, either by creating a plan that pays off higher-interest debt first or by consolidating debt.
- Consolidate assets. Move 401ks from old employers, and consolidate accounts at one brokerage firm to streamline account management, suggests Mari Adam, a certified financial planner in Boca Raton. Sign up for electronic access to easily monitor and transfer funds between investments. That way, you don’t have to save account statements, either. Most brokerages will provide free online access to statements for 10 years, she says.
- Review insurance policies. Ensure you have adequate coverage and check pricing to make sure you’re paying a competitive premium and have taken advantage of available discounts.
- Update your estate plan. Make sure all fiduciaries named in your will or trust are current and, if you don’t already have them, see your attorney to create a will, living will, healthcare proxy and durable power of attorney.
- Clean out your wallet. Remove credit cards you don’t use and store them safely at home.
- Shred unnecessary papers. Nothing cleans out drawers quicker than discarding old bank, credit card and investment statements. Be sure to shred them, rather than just throwing them out, to reduce the risk of identity theft, warns Jeremy Straub, chief executive officer of Coastal Wealth in Fort Lauderdale, a member of the MassMutual Financial Group.
One last tip: Don’t procrastinate. “People tend to put off some of their everyday financial housekeeping tasks,” Adam says. “As a result, when they need to do something urgently, they run into big problems.”