Spring is in the air. I am getting ready to start my outdoor gardening, and I know there is a lot of work to do before I will harvest the bounty. As I do this, I can’t help but feel that the same is true with our monetary lives.
Spring Is an Important Financial Season
April is an opportunity to connect, create awareness, and do the best you can to bloom in areas of your financial life.
Even as you embrace your fall physical season, your financial world can continue to blossom. You may want to cultivate new conversations about how to create your version of prosperity. You may want to grow your financial resources to impact the world around you.
Pick one focus area this spring – it may be your charitable giving strategies, your investment decisions, your tax management tactics, your communication intentions or your spending habits.
To illustrate the blooming process, I’ll take the example of someone who wants to get reconnected and be intentional with her investments. Here are 5 steps to get ready to financially bloom this spring.
Begin the Process with a Purpose
The blooming process begins with the question of why.
Start with a firm understanding of why it is important to grow financially this spring. Some examples include:
- Why you want to understand how to sustain the income needed during your distribution season of life.
- Why you want to manage your expectations for returns based on your current allocations.
- Why you want to position your assets to address legacy goals for your family or charitable organizations.
- Why you want to confirm you are invested in companies that reflect your values.
Your ‘why’ will be unique to you, and there may be several of them. These are your motivators to press into the opportunity for growth.
Understand Where You Are
The next step of the process of growing your investments will be asking, “Where are they?”
This may seem like an obvious question, but you’d be surprised at how many places you have money that perhaps you didn’t realize. You may be a real estate investor, or you may hold stocks, bonds, or alternative assets such as hedge funds or private equity.
The question of the vehicles is also worthy of review. Your investments may be held within tax-deferred accounts, such as employer sponsored plans. Or if they’re held in brokerage accounts, it’s a good time to review if you are paying taxes annually on the income or gains.
You may even have investments in life insurance or annuities that are more complex, or offer less liquidity but also warrant your attention.
This April – here’s your spring cleaning: Dust off those statements and open them up. Look at how they are titled. Reflect back on your ‘why’ to keep you moving forward.
How Do You Want to Use Your Investments?
Which asset is best positioned to provide for your liquidity needs? A liquid savings account or money markets are good tools in this regard.
What About Lifestyle Needs?
You may want to consider using fixed income resources, like Social Security and pensions, for fixed expenses, and look at variable income from your portfolio – that will reflect your market allocation – for expenses that can be adjusted.
If the market is up, you can shave off gains and take that trip you have planned! If the market pulled back a bit, make the needed adjustments for a period of time.
What About Longevity Concerns?
Bond ladders or income annuities may be the investments you want to use for long term income. They, alongside social security and pensions, will help you to create income that you can’t outlive.
For legacy planning, qualified plans are good to leave to charitable organizations, and non-qualified investments or real estate receive a step up in cost basis when they are inherited.
Evaluate Who Is Involved
Of course, we need to ask ourselves, who is involved with this growth process?
Chances are you already have some family members or trusted colleagues that you’ve brought into the conversation. Use this as an opportunity to reflect upon any others you may have left out who would add value to your process.
Also, ask yourself about your level of satisfaction with your professional team. This can mean anyone from accountants to estate attorneys to your financial advisor.
If you feel that perhaps you’ve outgrown your current providers, this April may be the perfect time to embark on a search for new support that fits the new, blooming person that you are.
The final step in the area of financial growth will be “What will you do?” This is where your feet hit the ground – wearing whatever amazing shoes, or kick-ass boots you want – so step into your potential!
Combine accounts if appropriate. Reposition or rebalance investment allocations if needed. Change beneficiary designations where warranted. Harvest any gain or loss if the market environment is ripe.
Summary of the Blooming Process
Like a flower pushing its way through hard packed soil, financial work is not easy. I encourage you to press on through. These growing pains are a part of the blooming process.
Like harvesting and sharing the cornucopia from your garden – flowers or vegetables – know that your family, friends and your community will benefit from your hard work.
What are your financial goals for the coming year? Are you taking any of these steps to get control of your financial situation? If not, do you have any other tips you’d like to share? Please do so in the comments below and join the conversation!