As a child, my mom never taught me how to claim a deduction on my taxes or to maximize my 401(k) deferrals, but she taught me a few important lessons that I can carry into my financial life.
Clean Your Room
Take charge of your own financial “room”. When I was a kid, the first thing I would do to clean my room was take everything lying on the floor and put it on the bed. I wanted to see all the items that needed to be addressed before I could take action. From there, I could sort the clean and dirty clothes, put the books back on the shelf, throw away any garbage, and maybe rearrange a thing or two.
Similarly, we should approach our financial life. If you’re unsure where to start, but you know things need to be “cleaned”, put it all out on the bed. Start by compiling all your information – bills, budget, accounts, credit card statements, pay stubs, etc. It’s important to know where everything is and what is coming in and going out. Sort out all the fixed things that you need for daily life – the clothes – from the things that may vary from time to time – the books. Then, take some time to throw away any garbage – subscriptions you’re paying for but not using, call your cable and internet companies and renegotiate, look for ways to reduce your food bills, or make your home more energy efficient. Finally, rearrange a thing or two. Can you increase your retirement plan savings, make additional principal mortgage payments, or maybe allocate more towards college savings for kids?
Cleaning my room was never my favorite chore, but it always felt great to see the finished product. If I was lucky, along the way I might find a hidden toy I had loved and forgotten about. Take some time to clean your financial room and who knows what hidden gems you may find!
Learn to Share
“Tis better to give than to receive” is an idiom that many of us are familiar with. As we share with others, our intentions are most often to make people happy or share some of our own joy.
In this vein, how will you share your financial life with others? It can be an important gift to your family and friends to think through how your legacy will be carried on. This can be done in many ways: cleaning up your own financial room, crafting a well thought out estate plan, or by sharing your gifts with people or causes that are important to you both now and later. The goal is to make any sort of transition as seamless as you possibly can.
Do Your Homework
What is the point of homework? Without getting into too much of a philosophical discussion about the homework, the end goal of homework is really a continuation of knowledge. Your teacher explains something to you and then it is your job to deepen your knowledge. My mom was not punishing by telling me to do my homework, she was hoping to give me skills to learn things on my own.
So, how can you do your “financial” homework? Consider which areas you need to deepen your knowledge. Perhaps you may benefit from a tutoring session with a Financial Advisor. There are many resources out there for you to improve your financial skills, and start learning things for yourself. Stonegate Financial is always here to help provide information and we would be happy to assist you in doing your homework!