Just like our closets, our financial lives might need an organizational overhaul. Here are the tips to clearing clutter when it comes to your money.
Our home’s storage—its drawers, cabinets, and shelves—may actually resemble our financial lives: littered with clutter. Instead of donating clothes we haven’t worn in years or recycling a box full of old smartphones gathering dust, when it comes to money, clearing clutter from our financial lives might look like zeroing in on whether you have too many credit cards, too many stocks in an investment account, and even old 401(k) accounts from past jobs.
It can be difficult to keep track of all of these accounts, not to mention the myriad documents and paperwork that accompany them. That’s why keeping it simple is sometimes the most effective money management tool. Read on for three tips for helping clear clutter from your financial life.
Our home’s storage—its drawers, cabinets, and shelves—may actually resemble our financial lives: littered with clutter. Instead of donating clothes we haven’t worn in years or recycling a box full of old smartphones gathering dust, when it comes to money, clearing clutter from our financial lives might look like zeroing in on whether you have too many credit cards, too many stocks in an investment account and even old 401(k) accounts from past jobs.
It can be difficult to keep track of all of these accounts, not to mention the myriad documents and paperwork that accompany them. That’s why keeping it simple is sometimes the most effective money management tool. Read on for three tips for helping clear clutter from your financial life.
From credit cards to investments, take stock of everything
While it may make sense to eventually consolidate your investment and retirement accounts, before you even ponder that, it’s important to take stock of what you have and make sure everything is organized.
To do this, create a list of all your different credit cards, bank accounts, retirement accounts, and investment accounts. This can help you figure out where you stand; having too many accounts can be difficult to keep track of. Especially with old 401(k)s from past employers, those might be worth rolling over into an IRA or other retirement options. Did you open up a credit card to score some extra travel reward points? Those cards might be worth closing, especially if you're paying annual fees. And, the more active credit cards you have, the more they may impact your credit score.
While you’re on this organizational task, don’t forget to keep track of your estate planning documents, including wills and trusts, as well as all of your insurance documents. Those are important aspects of your financial life in addition to the more traditional bank accounts and investment and retirement accounts.
Having a life binder—even a digital version—can help organize all of your important financial documents in one place. Even if you end up keeping all these accounts open, just being able to easily access and locate the information associated with these matters is an important step towards clearing clutter and obstacles from your finances.
Examine your investments
Financial clutter isn’t limited to the quantity of accounts and credit cards that you have.
When it comes to investing in particular, you may find that you are invested in too many stocks. While there isn’t a magic number for the quantity of stocks, being invested in fewer stocks and companies may help, as can ensuring that combination matches your risk tolerance, timeline, and objectives.
It may be worth speaking to a financial professional to develop a plan for not just simplifying your investments but also making sure that each investment is in line with your risk tolerance and time horizon. If you’re already working with a financial professional, you’ve probably already had these conversations on regular cadence.
If you’re not working with a financial professional, it’s important to take some time each quarter to review your portfolio. If your accounts are not set up to auto-rebalance, some rebalancing may be needed to de-clutter your investment accounts.
The bottom line: get organized, stay organized
Clearing clutter and keeping things organized requires work and maintenance. A clean closet, for example, can quickly become disorganized again in a matter of months. The same applies to your finances.
Every six months, keep a tab on your finances: Did you open a new credit card? Did you switch jobs and now have another 401(k) account to roll over?
Also, it’s important to be cognizant of any major life events that require a change to your estate planning and insurance documents. Updated documents are a key component of financial organization, and it can be easy to overlook some of these more nuanced aspects of your financial situation.
Often, the hardest part of organizing your finances is taking that first step. But getting your financial house in order is so worth it, and in the long run, it can help save you both time and money. You’ve got this!
A version of this article originally appeared on HerMoney.
What’s next?
Do you have an eligible account you’d like to roll over into your 51ԹϺ® 401(k)? Here’s how to get started: and click on the 401(k) account card on the left side. Scroll down to the “Consolidate your accounts” tile and click “Start your rollover now.”
