The Magic of Organizing Your Finances

3 MIN READ | #blog

Whether it’s cleaning out a junk drawer, or daring to reorganize the garage, many of us start with the same struggle when it comes to tackling home organization projects. “Where do I even begin?!” Your finances are no different. As organization professionals tout, the fewer pieces of clothing you own, the more likely you appreciate, and use, what you have because you can finally see it all arranged clearly in your closet. Similarly, by taking a few simple, manageable steps to thin out and arrange what you have financially, you can begin to feel more organized—and more confident—in short order.

A Strategy

It all begins with a strategy. There are huge benefits to be gained by creating a financial strategy, among them greater financial and emotional confidence. Despite this, two-thirds of Americans do not have a financial strategy.1 So, what does it entail?

  • Have clearly stated goals
  • Follow a time horizon
  • Consider life and disability insurance
  • Consider investments you are comfortable with
  • Designate estate beneficiaries
  • Plan for taxes and estate*
  • Understand your tolerance for risk
  • Apply asset allocation in their investments
  • Consider investing in an educational fund

Tidying the Rooms of Your Financial House

If you think of these nine elements of the strategy each as a separate room, you can start to organize. For example, you can begin by cleaning up your asset allocation room by thinking through your investment mix.**. As you begin to organize your asset allocation room, you quickly realize that it adjoins several others including risk tolerance and time horizon, and you can begin putting a dent in those rooms.

Under One Roof

As you work through the rooms, you’ll begin to see opportunities to group these rooms, almost like floors or sections of a house. Insurance and estate planning strategies, for example, can be combined into one category. Investments and risk tolerance can go into another category. These floors will even cross over at times, connected by hallways and staircases, and as they do you begin to get a holistic view of how it all works together.

This is the benefit of asset consolidation, a key principle in financial organization that provides clarity on what you own and how it helps you reach your goals. The fewer asset accounts you have spread around, the better you can see what you own and manage it.

When to Call the Professionals

You can certainly tackle tidying your rooms and organizing your floors on your own, as many choose to do, or you can seek the help of an organization professional. Financial professionals, like organization professionals, are equipped with the tools and resources to get the job done efficiently, having helped many financially confident Americans before you. More importantly, like an organization professional, a financial professional can provide an objective view. Is a particular asset helping you, or is it just taking up space like that kind-of-sad junior varsity sweatshirt from ninth grade? In the end, whether tidying your house or tidying your finances, it’s all about finding clarity and building confidence, and there is surely magic in that.

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2022-138136 Exp. 05/24

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SOURCES:

1 The Financial and Emotional Confidence Survey, 2021

DISCLAIMERS:

* Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

** Securities products and advisory services offered through Park Avenue Securities LLC (PAS), a registered broker-dealer and investment adviser. PAS is a wholly owned subsidiary of Guardian and a member FINRASIPC