As our lives progress, our finances get more complex and often confusing. Online and on paper, the more accounts there are, the harder it is to monitor and manage them —particularly in emergencies when someone else might need to manage your finances. (Learn more in our article, You Need a “Personal Finances Go Bag!”.)
Once you have taken inventory (see Part One of this article), you’ll have a clear view of all your accounts. Now you’re ready to simplify and organize your personal finances to help reduce the risks of:
- Bill-paying lapses
- Credit dings
- Consequences from missing or misplaced information
- Lapsed Long-Term Care insurance policies (You may find this article helpful: When Was the Last Time You Reviewed All Your Insurance Policies?)
- Lost safe deposit boxes
- Late tax filings
- Unknown stock cost basis
- Missed required minimum distributions of IRAs
How to Simplify
Go through your personal finances inventory and streamline, consolidate, eliminate, and document.
Eliminate unnecessary credit cards.
You really only need one or two, not 15. Pay off the others and cut them up — but don’t close the accounts. Open accounts benefit your credit score.
Consolidate bank accounts.
When feasible, reduce the number of personal bank accounts and the number of banks. With interest rates so low, and likely to be for the foreseeable future, there is little value in opening new accounts to chase yield.
Reduce the number of investment accounts.
Move stocks and bonds into fewer or even a single investment account. Consider moving all investments to one firm so all documents are coming from one source.
Consolidate retirement accounts with one institution.
Be sure to do this with guidance from your financial advisor and accountant.
Streamline loans and mortgages.
Look at your borrowing holistically and eliminate high-interest obligations, pay down early when possible, and consolidate with fewer lenders.
Check for unclaimed funds.
Contact the government in your state and in any other state where you’ve resided.
Understand the actual/current value of any collections.
Document the provenance, find the best place to get appraisals, and specify instructions for whomever will manage them in emergencies or transitions.
Redo your personal finances information list.
Designating who will step in during an emergency, and that your affairs are organized for them, will bring about peace of mind. (Our article Make Sure Bills Get Paid provides additional information.)
- For each institution, list current contact information for your trusted advisor, as well as user IDs and passwords, answers to security questions, and access codes.
- Make sure your trusted “go-to” person is plugged into any two-step identity verification and can unlock your computer or mobile device.
- Be sure your person knows where to find keys and has your home access codes, alarm codes, and security company verification words.
- Update this list regularly whenever you make changes and give a copy to someone you trust.
At Eddy & Schein Group, we’ve seen how life gets a lot simpler for our clients who have gone through this process with us. We’re here to help, so if simplicity is on your mind, just give us a call. We can help you be better prepared for your new normal.