First Things First

Adam M. Grossman

IN A CLASSIC EPISODE of the sitcom 30 Rock, Tina Fey’s character, Liz Lemon, muses about the size of her nest egg: “I have money saved. Two years. Maybe four, if I cancel cable.”

Not worried about the size of your cable bill? In all likelihood, you’re fretting about one aspect of your financial life—and probably more than one. You might be wrestling with housing costs, student loans, the cost of putting your own children through school, funding retirement accounts, what steps to take in response to the new tax law, or concerns about a stock market that seems to go higher every day. In fact, in working recently with one family, we identified no fewer than eight distinct financial priorities that they wanted to balance.

Meanwhile, the constant din of financial news can make it hard to focus. On a recent morning, these were some of the headlines:

  • “How the Fed Rate Hike Will Affect Your Finances”
  • “Market Convinced Trump Bump 2.0 Is Set for 2018”
  • “A Leading Indicator for Stocks Just Entered a Death Cross”

In the face of such uncertainty, it can be difficult to know where to start or what to prioritize. Here are three suggestions:

1. Set one overriding goal. This was probably the approach you took in school: If you had a big project or exam in front of you, you put your head down and focused on that one goal until you got it behind you. You didn’t completely neglect everything else; you simply prioritized other goals lower on your list until you got done that one thing that needed to get done first.

In your financial life, try the same approach. If you’re early in your career, maybe your goal is to pay off your student loans or save for a house. If you’re further along, maybe your goal is to transfer assets to the next generation tax-efficiently. Wherever you are, I believe it’s a powerful strategy to focus your financial resources on one primary goal at a time. For now, don’t worry about your second or third or eighth goal. I’m convinced that, by being single-minded in tackling financial priorities, you will actually end up accomplishing more overall than if you tried to tackle everything at once.

2. Write down your “big four.” By that, I mean your income, expenses, assets and liabilities. I always stress the importance of trying to get them all on one piece of paper.

There are two reasons for this. First, it helps ensure that nothing is falling through the cracks. Second, this may help you see solutions that would have eluded you if your financial information was scattered across a dozen different individual statements in your filing cabinet. Think about it like putting together a puzzle: You certainly wouldn’t try to assemble a puzzle without all the pieces on the table in front of you. It’s the same with your finances.

One example: A middle-aged couple I worked with were able to save thousands on life insurance premiums after realizing they had long since amassed enough money to self-insure.

3. Don’t let the best be the enemy of the better. It’s natural to feel overwhelmed by all the unknowns in your financial future. Where will my job take me? How will my industry change in the future and what will that mean for me? Will Congress change the tax code again? Will the estate tax go away permanently? Unfortunately, none of us has a crystal ball.

This might seem discouraging. “If I don’t know what’s going to happen,” you might worry, “I’m bound to make mistakes.” But here’s another way to look at it: Since there are no “right” answers out there, you can relax a little, knowing you are doing your best with the information you have. What’s most important is to avoid doing nothing. Take comfort in the fact that your financial plan does not need to be perfect. It’s far better to have a plan that might prove temporary than to have no plan at all.

Adam M. Grossman’s previous articles include Grossman’s Eleven and Ten Principles. Adam is the founder of Mayport Wealth Management, a fixed-fee financial planning firm in Boston. He’s an advocate of evidence-based investing and is on a mission to lower the cost of investment advice for consumers. Follow Adam on Twitter @AdamMGrossman.

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