Could your finances benefit from a spring clean? You could take your cue from the Swedes. They believe in ‘döstädning,’ or ‘death cleaning.’ It sounds pessimistic, but it involves decluttering your belongings to reduce the burden you leave behind to loved ones.
The philosophy gained international prominence through a 2018 book called The Gentle Art of Swedish Death Cleaning, by Margareta Magnusson, but many of the methods described to organise your home and belongings can be applied to your finances as well.
Why should you death clean your finances?
First, it can help you feel more in control of your money. Second, it can help you refocus your time (and money) on what matters most to you. And third, taking time to organise your finances now could spare your loved ones from a great deal of emotional and financial stress after you die.
Key steps in a financial spring clean
It’s a good idea to make a checklist and work your way through. Key steps include:
- Streamline your finances
Close accounts you don’t use, cancel unused subscriptions or memberships, and explore ways to cut back on wasteful spending
- Build a document library
Gather all important documents, including Wills, insurance policies, investment portfolios and property deeds. Consider storing documents securely online. Having an easily-accessible document library will help make sure your loved ones can find critical information quickly when needed
- Keep beneficiary information up to date
Review and update beneficiary details on life insurance policies, pensions and expressions of wishes to ensure they reflect your current intentions
- Revisit your investments
Are your investments still aligned with your long-term goals? Has your attitude to risk altered? Maybe your circumstances have changed? This information is important. We’ll monitor performance and rebalance when necessary; updating us on goals, risk preference and life changes will inform investment recommendations
- Maximise tax-efficiency
The new tax year brings new opportunities, allowances and reliefs to take advantage of, to reduce your tax liability. This includes revisiting your Inheritance Tax (IHT) strategy, which can help reduce the liability on your estate
- Consider your retirement plan
Are you saving enough into your pension to provide you with the lifestyle you desire in retirement? Are the underlying investments right for you? If you have multiple pension pots, would consolidating them be relevant for your unique requirements?
Making your plans known to others
Discussing your financial arrangements with trusted family members and keeping them updated on changes you’ve made, is an important part of the process too. Intergenerational financial planning involves managing wealth and financial strategies across multiple generations of a family, focusing on ensuring financial security, preserving assets and facilitating smooth wealth transfer while considering tax implications, estate planning and family values. They’re really valuable conversations to have.
Take control
Spring cleaning your finances is about more than just getting organised, it’s about simplifying your life, taking control and leaving the best possible legacy for loved ones. Maybe those Swedes really are on to something. We can help you get organised so you can focus on enjoying life.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.