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A financial State of the Union (FSOTU) is a dedicated time to sit down and take stock of your finances, bills, goals, savings and other important matters. Wealth Strategist Ben Rizzuto discusses how valuable this exercise can be and offers tips to help you conduct your own FSOTU.
President Biden delivered his State of the Union (SOTU) address on February 7, 2023. In it, he spoke about the jobs, infrastructure, the Russia-Ukraine conflict, and other issues important to Americans.
Another SOTU recently occurred that you may not have heard about. Away from all the cameras, coverage and analysis, at a small coffee shop near our house, my wife and I sat down for our Financial State of the Union (FSOTU).
This is something we’ve done regularly over the past several years, at least once a year if not even more frequently. We’ve found it to be extremely useful, both in terms of getting our finances in order and in providing some peace of mind on how we’re progressing toward our long-term goals. It’s something I think pretty much every household can benefit from, so I’d like to offer some tips to help you conduct your own FSOTU.
Some of you may be asking, “I already look at my bank accounts every month, I’ve set up a budget … why do I need to do this?” As a matter of financial fitness and security, I think it’s important for you and your significant other (or just you if you’re single) to sit down and take stock of your finances, bills, goals, savings and other important matters – the full picture, not just the usual month-to-month expense tracking and bill paying.
There is something to be said for the ritual of it all as well. The fact that we call it our FSOTU and the fact that we set aside time for it helps lend value and a certain formality to the exercise.
Our FSOTU is also an important part of our family conversation. We make sure to tell our daughter what we’re doing and why we devote this time to discuss these issues. Remember, financial education and financial literacy are skills that start at home and are most successful when done at home. In fact, we wrote a blog post on this issue last year.
During our FSOTU, we discuss many of the issues that are going to affect us financially over the course of the next year and into the future. We review our income and expenses and make decisions on where changes or improvements can be made. We decide which debts we want to focus on paying down sooner rather than later. We talk about projects that need to be completed around our house and other goals that we have, such as taking a vacation or increasing the amount we’re contributing to our retirement accounts. Sometimes the goals my wife and I have may differ, but we go into this discussion with openness and honesty and find compromises that align with our short-term and long-term objectives.
Overall, these meetings help us take stock. We’re able to feel more secure knowing where we stand and where we’re headed, and I feel they’ve helped us become stronger as a couple as well.
Hopefully this helps you better understand the value of this exercise and why I’m advocating for it. And now, here are some tips to help you conduct your own FSOTU:
Items to cover:
Things to bring to or access during the meeting (Get these items together beforehand and make sure you can access account websites before you sit down together. This will help you get the most out of the time you’ve set aside.)
After going through these items, my wife and I sometimes make significant changes. In other cases, we may not make any changes at all. Either way, reviewing these items helps us feel much more in control of our financial situation.
Remember, the lists above can be updated based on your situation, but my hope is that this gives you a starting point from which to create an ongoing conversation about your finances. I assure you that by conducting this meeting regularly, the state of your (financial) union will be stronger!
The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information.
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