Spring is almost here. This time of year conjures up all kinds of exciting images for me like beautiful sunny weather, blooming flowers and outdoor fun. I’m reminded, though, that this is also the time yellow pollen will soon blanket my car and window sills, and how that inevitably leads me into a big clean up throughout the house. I don’t mind, though, because after I feel renewed and certainly have a lot of pride in accomplishing the much needed task.
As a financial advisor, I often look for ways to help clients remember that their personal wealth needs to be cleaned up yearly. What better time than spring, to be reminded to get your budget in order, sweep up lingering debt and dust off and freshen up your investment portfolio?
Here are three ways to “spring clean” your finances:
1. Create and maintain your budget. (AKA Balance Sheet/Cost Analysis)
A great exercise for individuals or families is to drill down on how much money comes in and how much goes out. First thing, if you have a negative balance at the end of the month, then some changes are going to need to be made.
Even if you are breaking even, changes need to be made–most people know they need to save for their retirement, but putting together a solid plan and getting started can be difficult. After this exercise, you can now make investing a priority just like paying the mortgage or electric bill.
2. Sweep up lingering debt. If you have debt, write it all down and have a plan to eliminate it. One by one. Once you realize where the money is going and you’ve fine-tuned household spending, use some of the newfound money to pay off lingering debt. Debt can drag you down, and making a commitment to rid yourself it will be a relief. Once the debt is gone, utilize the money that was paying off the debt to start a rainy day fund. An emergency fund is a great way to minimize future debt when unexpected expenses arise.
3. Fine tune and polish your investment portfolio. Review your current portfolio and make sure it has been tailored and updated to the current market conditions. Many people will let years pass without making necessary changes to their investment portfolio. Your risk tolerance can and will change, changes in job status or lifestyle can all have an impact on your retirement. Make sure to set up an appointment with your financial advisor to discuss what’s best for your future.
Enjoy the season and don’t be afraid to take on what seems to be big tasks head on. Most likely you’ll be thankful for being on top of making things around you more clean and beautiful.
Rob Rumley is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Atlanta. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley Smith Barney, LLC, member SIPC.
