Can you believe that it’s already May? It’s the season for spring flowers, warmer temperatures and perhaps even a little spring cleaning. Consider as you clean your yard and put the winter clothes away, doing a little spring cleaning on your finances. Spring cleaning on finances you ask? Yes, absolutely.
Think about how you feel once your spring clean (or decluttering session) is over. I personally feel lighter, happier and of course more organized. In the spirit of full disclosure, clutter causes me stress so I regularly declutter my home, car, office, and finances. Interestingly enough, some research out of UCLA shows a correlation between clutter and higher levels of the stress hormone cortisol among women.
So the big question is how do we spring clean/declutter our finances?
Spring Cleaning your Finances in 5 Steps
1. Ask yourself: how do I want to feel at the end of this process?
Do you want to feel organized, at peace, happy, focused, or something else? When you’re clear on how you want to feel, you can find ways to get there. When I declutter my finances, I want to feel organized and at peace. I want to know that my personal paperwork (e.g. estate plan stuff) is in order, my financial records are organized, and my banking is streamlined so that I’ll feel confident and Zen about my finances.
2. Create a list of everything you’d like to accomplish.
Some possibilities may include organizing all of your financial paperwork, getting your estate paperwork (will, health-care directive, power of attorney, etc.) in order, revisiting your financial goals or creating new ones, setting up some automatic transfer to take the effort out of doing your finances, meeting with your financial planner to check your investments, or talk with a non-profit credit counsellor about your budget and debt.
3. Prioritize your list in order of importance.
Personally I tackle the big, hard stuff first knowing once that’s out of the way, everything else will be easier. this is a personal process, so it’s entirely up to you.
4. Prepare
I’ll use an analogy to explain what I mean. If I was going to bake a cake, I would make sure I have all of my baking dishes, equipment and ingredients on hand and lay them on the counter. This way, I’m not running around town or my kitchen looking for an ingredient while my batter is half done.
In terms of finances, think about your first priority and what you need to get this task accomplished. Do you need to:
- Purchase folders and labels to organize your financial documents?
- Talk with a professional (e.g. lawyer, financial planner, financial institution, non-profit credit counsellor, accountant, etc.)?
- Block out some quiet time, brew a strong cup of coffee and put your favourite music on so that you can work productively?
5. Take one step at a time
Focus on one task at a time and finish it, even if it’s over a bit of time. We tend to subscribe to the myth of multi-tasking as a way to be more productive. In reality it distracts us from the task at hand. Everything ends up taking longer and the quality isn’t always a 100% because our attention and focus is divided.
While I said there were only five steps, there is one last step once you’ve spring cleaned your finances. Celebrate! This can be a big, daunting task. and you did it. Pat yourself on the back and find ways to stay committed to organized finances so that at this time next year, it won’t feel as big.
Until our next chat, what’s one positive thing you can do today to help your financial future?