How to de-clutter your financial life

August is over, kids are back at school and everyone seems to be back at work. I know this, because when I head to the gym at 5:30 a.m., there is traffic!

August is over, kids are back at school and everyone seems to be back at work.  I know this, because when I head to the gym at 5:30 a.m., there is traffic!

New TV shows abound, and one of the themes this fall seems to be clutter.

There are shows featuring the whole gamut, from organizing your closets to literally saving the lives of hoarders about to be buried in  stuff.

There are two ways these same habits can affect your financial life.  The lack of a system (or keeping your system updated) can lead to financial clutter, which, when compounded, can cause some serious financial mistakes.

For example, if you bought term insurance to cover your mortgage debt, then subsequently remortgaged your home, is your amortization still covered by the term of your insurance?

When was the last time you looked at that policy to be sure it still does the job?

David Bach, in his book Smart Women Finish Rich, gives detailed instructions on how to set up financial record keeping systems, urging you to “find your stuff.”

The financial impact of being a collector of things can be huge.  Most of us suffer from the consumerism that abounds in the 21st century to some degree or another. I can tell you from personal experience that I am tired of buying things just to run out of room, and then send them off to the kids, or the thrift store.  Taken to the extreme, a buying habit can cause severe financial damage, especially when purchases create credit card debt.

Another of Bach’s techniques is to force yourself into a “cooling off period.”  If you still think the purchase makes sense after 48 hours, then go ahead.  This process takes away impulse and emotional purchases.  If shopping is a bigger part of your life than you can afford, consider that it is sometimes an effort to cure loneliness and boredom.  There are better ways that won’t jeopardize your retirement!

So sit back, enjoy the fall evenings and let those hoarding TV shows cure you of any desire to darken the doors of the mall, ever again. And call your financial advisor to increase your monthly RRSP contribution.

Judy Poole is a financial advisor with Raymond James, and has spent the last 40 years involved in the financial industry.

This article is provided as a general source of information and should not be considered personal investment advice.  The views expressed are those of the author and not necessarily those of Raymond James Ltd.  Securities offered through Raymond James Ltd., Member-Canadian Investor Protection Fund. Financial planning and insurance offered through Raymond James Financial Planning Ltd., not a Member-Canadian Investor Protection Fund.

You can reach her at judy.poole@raymondjames.ca.

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