- Decision fatigue can creep into our lives in many situations, but when it comes to making decisions about our finances, it can be especially difficult.
- If you’re trying to tackle decisions around money, there are three basic categories to consider: cash flow, taxes, and your balance sheet.
- A good financial professional can help you organize your finances and relieve decision fatigue.
You’ve likely heard of Marie Kondo, organizer extraordinaire. In 2014, she came out with the book The Life Changing Magic of Tidying Up, which led to a number of products and services, plus a wildly popular Netflix series, Tidying Up With Marie Kondo. She provides people with a framework to make decisions about their possessions, freeing them from their clutter and helping them to live more organized lives.
It can be incredibly difficult to make decisions on what to do about our possessions. Tangible items are difficult enough, but the intangible things, such as our finances, can be an even larger source of decision fatigue. Money is conceptual and it can be a tough thing to get your arms around, but there are some basics that can help you “tidy up” your finances and reduce the accompanying decision fatigue you may have around them.
There are basically three categories of money: your cash flow, your taxes, and your balance sheet. Understanding these categories can help make it less daunting because you know what it is you’re tackling, and it keeps you focused when you’re organizing your finances.
Let’s start with cash flow. We make daily decisions around this because we live in our cash flow. We have to decide when and what to spend and save all the time. This requires budgeting, short-term and long-term thinking and planning, and examining sources of income.
Then there are taxes. Tax laws are constantly changing, which means that it’s a good idea to be proactive about taking a look at your taxes every year to see what you can do to reduce them. After all, no one enjoys paying taxes, and there may be changes in your family life, changes at work, and changes to your income, in addition to the tax code changes, that affect what you pay.
Finally, there’s your balance sheet, which consists of your assets and liabilities.
Your liabilities are your credit card debt, student loan debt, mortgages, car loans, and other revolving debt. Things to consider are: how to pay for these, the order in which you’ll pay them off, and whether you can take on additional debt for various reasons.
Your assets include cash and things of value that could be converted into cash, such as stocks, property, and automobiles, to name a few. Things to consider are: how to invest your money, how to diversify your investments, and asset allocation.
If the thought of these money decisions is causing you fatigue, it’s understandable. We’re coming up on a new year; do yourself a favor and find someone who can “Marie Kondo” your finances. There are financial advisors who are there to help with decision fatigue, organize your finances, and make sure things aren’t slipping through the cracks. You’ll feel a lot more comfortable and secure, knowing you have control over your money. Until next time, enjoy.
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