Diehard minimalist, or borderline hoarder. If you’ve at least feigned an interest in Marie Kondo’s organization skills, or have deliberated internally about whether or not you should throw away last week’s newspaper, you’ve no doubt given at least some thought to removing clutter from your physical space.
But have you ever thought about decluttering your financial life?
Bills, bills, bills. Insurance premium letters, tax notices and statements, and more bills can all add to your financial clutter. While physical clutter makes living in a physical space more difficult, financial clutter makes it more difficult to navigate your finances properly and enjoy your life. Constantly worrying about routine, mundane financial tasks can stop you from pursuing your financial goals.
Your life is like a jar, and all of your priorities need to fit into that jar. Large rocks are long-term financial goals, like paying for your child’s college education. Medium sized pebbles are smaller, shorter term priorities, like vacation time and career growth. Sand in this metaphor represents your day to day tasks, like taking care of your bills and living expenses.
If your jar is filled with sand, you won’t be able to fit any large or medium-sized rocks into your jar. Conversely, start with the large and medium-sized rocks first, then your jar will still have space for sand.
Many people get bogged down by daily tasks to the detriment of their long term financial goals. As a result, conversations with a financial advisor often cover these ways to declutter your financial life. Here are some quick tips to help you:
- Automating savings: Automatically depositing a portion of your income into a savings or 401(k) account and setting up automatic monthly transfers from your bank account
- Automating bills and payments: Setting up utility bills, insurance bills, and car payments to be automatically paid from a checking account can help avoid financial clutter. Many monthly bills can be automated in this fashion.
- Automating expense tracking: Using an expense tracking system like Mint can help you figure out where your money is going on a monthly basis, and assign top-level budgets for each category of spending.
If your energy is going toward handling basic daily tasks instead of focusing on long-term goals, you should reach out to a financial advisor.
Sources: Modera financial advisors in Boston
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