Three Ways to Simplify Your Financial Life

Posted on:  January 8th, 2016
By:  Diane Morrison

You see it while standing in line at the supermarket – once you get past the latest exploits of the Kardashians, you notice that the big trend seems to be towards simplifying your life. From de-cluttering and organizing to full-on purging, the antidote to a busy life is to pare down to just the essentials. We can’t comment on whether or not you should pack it up and move into a 500 square foot mini house, but we do have a few tips here to simplify your financial life.

  1. Consolidate Accounts. Maintaining savings and checking accounts at several different banks, means multiple statements to review, file and store. Add in multiple IRAs, a 401k or two and brokerage accounts and you have a lot of monthly record-keeping as well as year-end forms to gather for tax time. Consider moving your money to just one or two financial institutions and perhaps consolidating similar types of accounts. Be sure to take into consideration FDIC insurance limits on the total amount you hold at any one institution. Also, when moving money held in IRAs, be certain to set up trustee-to-trustee transfers instead of rollovers as there is a one-per-year limit on rollovers.
  2. Use Technology. These days, there’s really no reason to drive to the bank and stand in line. Set up your paychecks, Social Security benefits or pension disbursements to be automatically deposited in your accounts. Automate your saving by setting up automatic transfers between your checking account and your savings, retirement or investment accounts. For those miscellaneous deposits, most banks now offer an app that allows you to deposit funds by using your smartphone or mobile device. You can also take advantage of the on-line bill paying functions offered by your financial institution. You can even set up automatic payments for your recurring bills – a no brainer in every sense of the word.
  3. Limit Credit Accounts. Once again, it’s all about monthly statements. More open accounts mean more monthly statements to review, file and store – and more bills to pay. It may not seem like much, but by limiting the number of credit cards, you’ll save a little time and we can all use that. You may want to give some thought to whether or not to close unused credit accounts or leave them open. Depending on what the rest of your finances look like, having too much open credit may hurt your credit score, however closing credit card accounts, especially several at once, may also affect your credit score negatively in the short term.

As always, if you have questions or concerns about how making these moves might affect you tax-wise, don’t hesitate to call us.

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