Spring Clean
Already, I hate the title of this blog. Is there no other personal finance journalistic trope more hackneyed than “spring clean your finances”? Yes, I want you to do the usual things (throw out ancient statements and tax returns, cancel unused subscription services). But mostly, the thing I want you to spring clean is…your brain.
I want you to declutter the gray matter between your ears. With longer, warmer days ahead (or even here right now), I want you to clear out mental space to make room for summer BBQ recipes and major league baseball stats. To do that, you need to stop obsessing over:
Your retirement plan’s vast menu of funds. Those of you who are or were federal employees are familiar with the TSP retirement plan, the federal answer to the 401(k). The hallmark of TSP is that there are five – just five – investment fund options (although you can combine them in different ways to create a target-date fund). Some people hate this, but the Marie Kondo in me loves it. You need a well-crafted investment cocktail for sure, but as any true martini aficionado knows, just a few genuinely quality ingredients are all that you need.
The tax treatment of your retirement savings. I don’t know what your tax rate will be 20 years from now and neither do you. Consider your needs today (Cash flow? Tax credits? Student loan income-driven repayment plan?), take your best WAG at what you think the future will hold, and then just move on with the Roth (post-tax) versus traditional (pre-tax) decision. (By the way, it’s not an all-or-nothing choice.) As time passes and your situation changes or you gain more information, you can make a switch. But understand that failing to optimize the tax treatment of your retirement savings will not be the difference between a retirement on the Riviera and buying dented cat food tins at Aldi.
Saving the “right” amount in your child’s 529 account. This one is easy. The right amount is the amount that you can afford after you have taken care of your immediate needs without debt (obviously) and are saving appropriately for retirement. The college account is for the leftover. Sorry, kids.
Go outside. Play fetch with the dog. Plant some flowers. Your money will still be there when you get back.
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