Consolidating Our Finances
Oftentimes when I meet with a new family to learn and discuss their situation, they tend to say that they feel “all over the place” with their finances. This is probably the most common pain point I see. It’s so easy in today’s world to get caught up in our day-to-day lives, and because of that we often fail to take a step back and get a look at the full picture. I’m here to help you solve this problem.
One of the first steps in designing and implementing a sound financial plan is gaining an understanding of where we currently sit. This means we need to list all of our assets, liabilities, cash flows, etc. It sounds simple until we realize just how much we have to account for. Think about it, we may be talking about multiple bank accounts, retirement/investment accounts, car/personal loans, home mortgage, extra income, social security, credit card debt, etc. The point is, it tends to be a lot. This is typically the first chance I get to roll up my sleeves and go to work, and the results/reaction from the people I serve always reminds me why I love doing what I do.
Once we have an “inventory” of everything in our financial picture, it is time to look for opportunities to consolidate. One situation that I commonly see is someone with a handful of old 401K’s or retirement plans from previous employers, some they may have forgotten about or haven’t looked at in years. This can be an opportunity to roll into one single account, typically an IRA. This will limit the amount of headache and confusion when crafting a financial plan. It also allows for easier diversification and limits “overlapping” of investments.
Once we’ve done some consolidation and have a clear picture of where we stand, I tend to see a sense of relief in the people I serve. This is extremely rewarding and tends to get the ball rolling in the right direction, but it doesn’t stop there. If you prefer to visualize the situation like I do, then the next step is plugging our “inventory” into a planning software. I use RightCapital as I have found it the most user friendly and complete when it comes to planning. The beauty of this software is that both clients and advisors have the chance to test new scenarios and look at potential results. This is a huge help when it comes to planning holistically. From there, we can observe in real time what our situation looks like, we can plan for the future, and we can re-visit the areas that need some extra attention.
I could go on and on about the benefits of consolidation, but I’ll leave you with a few closing thoughts. I challenge you to mentally inventory everything in your financial life. For most, it would take days or weeks to come up with every last piece. Do yourself a favor and at the very least write down everything you can think of. Once you’ve done this, ask yourself if it’s appropriate to move to a financial planning software or better yet, reach out to an advisor. If either of these seem right for you, or even if you’re unsure, send me a message or give me a call. I take pride in helping families and individuals gain a better understanding of where they stand and how to move forward. If you’re interested in help, or simply want another opinion, I’m always here to chat. And for my DIY folks out there, seriously consider looking into RightCapital, I’m happy to offer access for a small fee to help cover the cost. As always, don’t hesitate to reach out!
Tanner Millar
Investment Advisor - Core Planning
tanner@yourcoreplan.com
(660)-998-4639