For Success, Get Organized

There’s a great bumper sticker out there that reads: “Organized people are just too lazy to search for stuff.”

The quip gave me a laugh when I saw it a couple of years back while sitting at a traffic light. To some of us, the idea of being organized seems humorously far-fetched – and more so as our lives become more complex.

Still, I have to respectfully disagree with the bumper sticker’s sentiment. Having worked with hundreds of clients over the years as a financial advisor, I’ve personally seen that being organized is the best way to achieve your goals, to navigate life’s twists and turns, and to enjoy life more.

From a financial perspective, getting organized involves a few clear (if not always simple) steps, which I outlined in last week’s blog :

  • Create or update your financial plan
  • Review your investments
  • Shore up your insurance
  • Create or update your estate plan

These are all great foundational steps for achieving financial success over the long term. However there’s also the shorter-term perspective to consider. For achieving short-term goals, there’s still no better tool than the annual budget. Budgets help impose the discipline that turns your vague goals into concrete accomplishments.

Your 2019 goals may include “make monthly retirement plan contributions,” for example. But to do it effectively, you must include the goal in a formal budget. Calculate monthly deposits and set them up for auto-deposit. In this way you’ll be steadily achieving a concrete goal without the complication of manually making a deposit each month.

One misconception about budgeting is that it’s just a way for scuffling young families to make ends meet. In fact, as we become more successful, as our families expand, and as our wants and needs multiply, the more important it becomes to have a well-organized budget. Families with high incomes need to steward their money diligently simply because there are so many more opportunities for it to slip through our fingers.

Following a budget allows us to identify and plug the “leaks” that are drawing away money that should go to the areas and priorities that matter most to us.

If your past efforts to stick to a budget have come up short, I urge you to consider trying again, but perhaps with a new tack. Some families find that using an annual budget rather than a monthly budget is most effective.

This stands to reason: If you create your budget monthly at the beginning of the year, you may overlook the cost of December’s holiday gifts, for example. On the other hand, those budgeting for an entire year tend to plan more thoroughly and include more expense categories.

Academic studies back up the case for an annual budget. They have shown that consumers tend to underestimate their spending when planning one month ahead, but are more accurate when planning for the year ahead.

The important thing is to use a budgeting approach that works for you. Whether your 2019 goal includes slashing debt, aggressively funding your retirement accounts or saving for college expenses, using a budget is the best way to commit, organize and make it happen.

If you don’t already have a personalized wealth management website integrated with online budgeting, we may be able to help. That’s just part of what we do. Continued success in the new year!

Play Video about thumbnail