Financial Spring Cleaning, One Room at a Time

Most of us understand risk management better than we think, but we have a harder time moving from understanding to application.

If you decide to eat better, you probably do not change your diet, start exercising five days a week, completely reorganize your schedule, go to bed two hours earlier, and eliminate every bad habit on Monday morning. You make one change, stick with it until it’s consistent ─ a habit. Then you make another.

The idea shows up in books such as The Compound Effect and Atomic Habits, and in the works of accomplished personal development speakers such as Tony Robbins and the late Jim Rohn.

Our personal bias and self-limiting beliefs get in the way of implementing.

I sometimes wonder what we mean when we ask, “Do you do comprehensive planning?” How many things is that? Is “holistic planning” the same.” 

Risk management is a very human activity. We see something that could cause trouble, decide how much of it we can live with, and do something about it. There is no reason our financial lives have to be different.

Taxes are a good place to start. For many households and business owners, taxes are one of the largest financial risks they face. Yet tax planning can get pushed aside, confined by single-issue sales pitches built on bad math (Roth IRA conversions anyone?), or buried beneath complicated investment decisions.

Small business owners offer an interesting example. The NFIB’s 2024 Small Business Problems and Priorities survey found that the cost of health insurance remains their No. 1 problem, a position it has held since 1986. Federal taxes on business income ranked fourth. They are recurring financial risks that affect what owners keep, spend, and ultimately accumulate.

And solving them does not necessarily require a complicated financial product.

A business owner might begin with the CPA reviewing deductions, retirement plan contributions, depreciation, or other provisions already available under the tax code.

A family might begin by examining health care costs, the tax consequences of retirement income, and for business owners the tax opportunities found in federal tax credits for small business retirement plan contributions. We see family businesses with 50% of payroll going to families.

You don’t have to solve every financial problem now. Pick the risk that deserves attention first. Work on it, put the change in place; then move to the next room.

When something eventually happens—as it always does—you might not have a perfect plan. But you can have a plan that has already dealt with the risks you could see coming.

When the financial side is organized, there is more room to deal with the human side of life.