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Spring Clean Your Finances
Arcadia Weekly Apr 30, 2015
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By Alan Whitman
Spring has arrived in Los Angeles, but not every resident looks forward to this time of year. Spring is often associated with tax time, forcing many to confront their finances for the first time in 2015. According to a recent study by the American Psychological Association, about three out of every four Americans experience financial stress, which can lead to low productivity and poor health. Now that tax season is over, do more this spring than clearing out your closets and fluffing your pillows for a fresh start to the rest of 2015 – try spring cleaning your finances.
-Create the Right Environment
The first step to spring cleaning is to set aside ample time. If you’re going to go through a year’s worth of receipts, budgets and options, you can use similar techniques to set yourself up for success. In this case, time really can be money and it’s worth setting aside a few hours or even days to properly comb through your finances.
-Stick to the Plan
After setting aside time, you’ll need to develop a strategy and decide where to clean first. Organization is just as critical when it comes to spring cleaning your finances. As a Morgan Stanley financial advisor, I recommend to all my clients to keep track of their budget. It’s important to know what you are willing to spend and what your saving goals are. Creating a budget can be a big task in itself and sticking to one requires constant re-evaluation. If your salary or rent changed this year, or if your cable bill was raised or your gas charges were lower than usual, you may want to rethink your spending choices for the rest of the year.
-Be Efficient
Why hand-wash all your dishes if you have a functional dishwasher? Spending smart is for everyone; and it often doesn’t require any lifestyle changes. Always keep track of discounts, coupons and sales to ensure you’re always getting the best deal. Efficient spending habits simply involve thinking ahead; whether that means downloading digital coupons, planning your big purchases around holiday discounts or filling up on gas when you’re near the cheapest station.
-Clear Out the Clutter
Spring cleaning is all about clearing out clutter to make room for necessities. There’s nothing like tax season to remind us how important it is to keep a record of certain transactions, but it can also raise awareness to the excess copies and bills we don’t need. As digital banking becomes increasingly popular, it can be helpful to shred statements that simply add to the clutter. Of course if your financial information is kept anywhere online, I recommend being particularly cautious of accounts’ security. Documents you are unlikely to require for the rest of the year include credit card bills, pay stubs and utility bills. You should keep house and mortgage documents, vehicle titles and insurance policies as they may come in handy for future transactions.
-Spread Your Skills
When you’re sprucing up your financial lifestyle, don’t forget about your investment habits. Now is a good time to talk to your CPA or Financial Advisor about the status of your investment. You’ll want to work with a professional to assess if your portfolio is as diversified as you’d like it to be and determine how you can reallocate assets to fit your financial goals. If you are a year closer to retirement or a few months away from expanding your family, take the time to consider your risk tolerance and how this may change in the future. Once you re-evaluate your current budget, goals and situation, you can make more informed decisions about how to invest smarter this year.
Alan Whitman is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Pasadena. The information contained in this interview 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. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors do not provide tax or legal advice. Investors should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters. 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.
