Should you spruce up your finances by consolidating accounts?
Over years or decades, it’s quite common to accumulate multiple accounts. That’s why it’s essential to periodically review all of these to see if there are accounts that can be closed or merged. “I try to do this with clients because sometimes they will open accounts for a specific purpose and once the purpose is fulfilled, they forget about them,” says Hannan. “Maybe they are accounts for children who eventually outgrow the need,” she shares. Married couples might have accounts that are no longer needed if they’ve migrated to joint accounts.
401k and HSA accounts can also be hanging around from past jobs. Typically, it’s pretty simple to rollover a 401k into an existing or new account. But HSA money can be trickier to move. The pain is worth the gain, though, because both account types need to be optimized to grow in the market over time.
Also check your wallet and count your credit cards. You may want to consider closing some to streamline your payments. There is one credit caveat, though. “Be cognizant of what you’re consolidating from a credit perspective,” cautions Hannan. “Your long-standing credit cards that you’ve had for 20 years carry a lot of history that’s really valuable to your credit score.”
Is your asset allocation neat and tidy?
Although some people may want to “set and forget” their investments, you definitely should review your portfolio periodically throughout the year. “Sometimes we’ve done some tax loss harvesting, and we need to ‘clean up’ the allocation to make sure we’re not overexposed in some areas,” says Hannan. “We want to make sure we’re still adhering to our goal-based investment policy statement so we don’t have any concentrated positions which can create risk in the portfolio.”
Does your charitable giving need a refresh?
Once you’ve donated to a particular organization, it can be easy to feel a guilty pull to give each year. But it isn’t a given. “Just because you’ve done it in the past, doesn’t mean you need to continue to do it in the future,” says Hannan. Maybe you just need the right vocabulary to break the expectation. “An easy exit can be saying something like, ‘We’ve refined our charitable intentions and this year we will be reallocating to a cause that’s more aligned to our family mission,’” she says.
You’re in control of what you give, and it’s ok if your life and your goals change and pull you in another direction. “You’re aligning with your beliefs, your values, your mission, and what you’re hoping to achieve this year,” Hannan affirms.
Can you sweep out some mental cobwebs by letting go of old beliefs about money that no longer serve you?
Answering this last question calls for a little introspection, tossing toxic thinking into the waste bin to unleash your full financial potential. Sometimes this means allowing yourself to spend what you’ve worked so hard to earn and save. “We’re working with clients right now who have $9M and live very modestly. The wife has a real fear of long-term care costs,” shares Hannan. “She wants to buy long-term care insurance, because she’s afraid paying for that care would deplete her assets. Based on her current assets, spending habits and projected long-term care costs, they are not even close to running out of money. Sometimes dispelling fears that have been ingrained into one’s life experience should be addressed with actual data and projections to help clients make clear decisions. In this case, our clients have the ability to self-fund any care they would need,” explains Hannan.
Financial fears can really hold people back, especially when they’re not based in reality. “We have to narrow down the fear and then juxtapose it to the end goal, then work through it that way,” says Hannan.
What are your financial fears? Spend some time thinking through what worries you, and you might find there’s something you can let go to enjoy life more fully.
