While you’re at home…
Financial housekeeping for now and later

By Kelly Greene, TIAA Sr. Director and co-author of New York Times bestseller The Wall Street Journal Complete Retirement Guidebook
I’m writing this in my living room, and you’re probably reading it in yours.
 
But let’s look past our isolation right now and focus on the silver lining: You’re probably spending less, saving more—and if you’re lucky enough to be working at home, you may have time to finally set yourself up to manage your money well.
 
Maybe you’re looking for smart ways to use a stimulus payment, or how best to save what you’re no longer spending on gas, lunch at work, or extras like baseball tickets and vacations. The biggest splurges these days tend to be pizza delivery or Chinese take-out, right?
 
Here’s your chance to hit a financial “reset” button. Steal a couple of hours from binge-watching the latest show, pull out your laptop and any paper statements, and try these steps:
  1. Make, or update, your budget.
Getting a grip on your monthly income and expenses can help you regain your sense of control despite the ongoing market volatility. And you don’t have to log every dollar you spend to make it happen. There are a number of ways to create a budget.
 
When you see where the money goes, you can divide it into wants, needs and savings. Needs generally include your rent or mortgage, car (including gas and insurance) or other transportation costs, food, utilities (including cellphone service and Wi-Fi), insurance and clothing. From there, you can figure out how much you’re typically spending on wants from entertainment to travel, gifts and other extras. You may want to consider pre-pandemic levels of spending on wants—or, if your situation or outlook have changed, come up with your best estimate going forward.
  1. Do some pruning.
While you’re looking at your expenses, keep an eye out for monthly subscriptions you no longer use, like gym memberships—then hit pause, cancel them, or fold them into a family plan. Are you driving less? It’s worth a call to your insurance company to ask for a lower premium.
 
As you gather your account statements, are you seeing overlap, such as multiple bank accounts, credit cards, IRAs and workplace retirement accounts with past employers’ plans? You can almost undoubtedly save money and time by slimming down to the accounts you prefer. Consider keeping the bank accounts paying better interest rates, credit cards with lower fees, and retirement accounts at your current employer. Also worth holding onto: Accounts with companies that provide memorable customer service and reward points you actually use, or a workplace retirement plan that includes advice.
 
Consolidating your retirement accounts can help you get a better sense of the big picture, and understand how your overall portfolio is allocated. One note: When you roll over savings from one retirement account to another, it’s smoother to do what’s called a “direct transfer”--moving money directly from one institution to another. If you cash out the account instead, you have to make sure you complete the rollover in 60 days—or you could face taxes.1
 
  1. Back to basics.
Another way to lower your stress level: Shore up your emergency savings. The pros say to save enough in your rainy-day fund to cover at least three—and preferably six--months of basic expenses. Your spruced-up budget will give you a good sense of your current needs. You may want to add big-ticket expenses like private-school tuition, too. Someone else might consider those wants, but if you’re willing to save up to cover them for several months, go for it.
 
Next up, paying down debt. It’s typically smartest to tackle bills with higher interest rates first—usually credit cards or car loans. If you have multiple credit cards with similar interest rates, consider cancelling all but one or two you’ve held the longest. That can help protect your credit rating. And if you’re still left with a credit-card balance you can’t pay off yet, it’s worth asking for a lower interest rate.
 
Mortgages and student loans typically have lower interest rates and may provide tax benefits, but they may be worth a new look, too. Mortgage rates have dropped significantly in the past few years, so if you have an older loan or an adjustable rate, you may want to ask your lender about dropping the rate on your current loan. (It’s possible in some cases. After I started the refinancing process in March, my mortgage lender offered to convert my current adjustable-rate loan into a fixed loan with a lower rate.)
 
  1. Revisit the “3 Rs.”
It’s also a great time to review your financial plan and goals, assess your risk tolerance, and consider rebalancing your investments. Even if you took a look at your long-term goals as recently as January, they may have changed. One of my friends recently decided to buy a home where she’s quarantined. Lockdown partners are planning weddings. Others now want to have children. You probably have some resources as close as your keyboard that can help you think through those goals. And don’t think that you have to wait for the end of lockdown to meet with a professional. There are many ways to get help virtually.
 
Either with an advisor or on your own, it’s worth gauging your current risk tolerance, typically with a questionnaire. Knowing how comfortable you feel about investing can help you decide whether to rebalance your portfolio. Even without a pandemic, our personal risk tolerance can change over time. If you find that it has dropped, you may want to consider making changes in your asset allocation going forward, including investments that guarantee principal or growth, such as some fixed annuities, certificates of deposit or money-market accounts.
 
  1. Daydream.
Here’s your reward for reading your financial statements: A little day-dreaming about retirement. Even if you’re 20 years out, working from home right now can help you glimpse the future. Granted, this exercise might feel like a stretch if you’re monitoring schoolwork, walking the dog five times a day, tap-dancing for toddlers, or making sure your mother is staying home, while trying to do your own job, cooking, cleaning and zooming. But stick with me for a moment.
 
Retirement brings freedom from the workplace and commuting. Newfound togetherness with family. Round-the-clock life with your partner. More time to pursue passions, from cooking to gardening or hiking and so on. And the little things: Whether or not to wear pajamas past breakfast or cook dinner from scratch. Daily life right now can give us a better sense of our preferences when those choices are ours. We can also get a sense of what we might afford with a little virtual help.
 
Would you want to move when you retire, maybe to somewhere with fewer people or a great view? One of the most searched retirement-planning terms online is the “best states to retire.” There are many lists and rankings that vary based on how heavily they weight weather, taxes, safety, health care, affordability and so forth. Another choice: If you have children, you may also want to think about whether to move near your kids in retirement.
 
As we’ve learned from Marie Kondo, it’s easiest to tackle cleaning if you break it into bite-size tasks. But try not to view financial housekeeping as a chore. Instead, take advantage of this time at home to help steer toward a better future—when road-trips are fun again.
1 Before consolidating assets or rolling over from a previous employer’s plan, be sure to carefully consider the benefits of both the existing and new product or plan. There will likely be differences in features, costs, surrender charges, services and other important aspects. There may also be tax consequences or other penalties associated with the transfer of assets. Indirect transfers may be subject to taxation and penalties. Speak with a TIAA consultant and your tax advisor regarding your situation. Learn more at TIAA.org/knowyouroptions
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