I want to simplify my finances but where do I begin?

Begin to Simplify

As I have state before simplifying your finances is a process.  It is not something that you can do overnight.  One question I hear often is where do I beginning?  It is a valid question.  So I have come up with 5 simple questions you can answer to help you get started with simplifying and organizing your finances.  By answering these questions you will immediately identify where you should begin.

How many do you have?

How many credit cards do you have?

How many bank accounts do you have?

How many retirement accounts do you have?

How many investment accounts do you have?

Asking how many is the first step to begin simplifying.  You can not really know where you are going to begin until you find out exactly how many and how much you have.  Sometimes we forget what we have and where its located.  So good way to do this is to gather your most recent statement.  Once you have all statements, you can beginning reviewing them.  The next question is a little harder.

How many do you really need?

How often do you really use that credit card? How often do you use that second checking account? Can you consolidate those retirement or investment accounts?  Frequency of use can be used as a way to decide what you can keep or eliminate.  Some things may only be used every once in a while and others may not be used because you may have forgot you had it.  If this is the case now is the time to decide if you really need to keep the account active or open.

Why are you still holding on to it?

You do not need to just start closing accounts without asking yourself why do I still have this account.  There was a reason why you opened the account.  Did the account offer a specific benefit that you liked originally?  For example, you opened a new credit card account to receive a specific discount at the time of purchase.  Do you still receive the benefit?  Maybe you opened a new deposit account because it was paying a higher rate of interest but you no longer receive this benefit.  So decide what is the reason for each account.  This will help you begin to eliminate unnecessary accounts.

Does it currently fit your lifestyle?

Now consider your current lifestyle.  Do you travel more now?  If  you are traveling more maybe you need a National or Regional bank account instead of your local bank.  Also if you are traveling more you may only need the credit card that provides you with mileage points or special airline privileges.  Have your banking needs changed?  Maybe you are looking for more online capabilities?  So the local bank is great but there online capabilities are not as good as the other account I have?  Reviewing your lifestyle will help you determine which accounts maybe eliminated that do not fit your lifestyle.

Now what do I do with the extras?

After answering the above questions, you now should have identified a few accounts that you can eliminate that you do not need, does not fit with your current lifestyle or  you just forgot you had.  Now what do I do with them.   The banking accounts if they are with the same bank you can consolidate them. If they are with another bank you should close the account and transfer the funds to your primary bank.  The credit card you can close them but look to see how long these account have been opened.  The reason for this is because you may not want to close a credit card account which you have a long history with it could possibly impact your credit score.   The investment and retirement accounts should consolidate them if possible.  For example, you are not able to consolidate traditional IRA accounts with Roth IRA accounts.  Before you begin consolidating retirement accounts check to make sure they can be consolidated.

So now take action by asking yourself these 5 simple questions.  Answering these questions will help you identify where you should begin simplifying your personal finances by eliminating or consolidating various accounts.

Til next time take one step at a time to simplify your finances.



What are you doing right with your personal finances?


Do you  have a tendency to focus on the negative when discussing your personal finances and forget about the things you are doing right with your finances?

I have too much debt.

I don’t have an emergency fund.

I have not saved for retirement.

It is good to focus on the things you need to improve upon but you can not take for granted the positive things you have done with your finances.  I believe if you want to organize your finances you should look at the things you are doing right.  Once you have identified the positives things you are doing, then you can begin to tackle the things you need to fix to better organize and simplify your finances.  You say there is nothing positive about your finances.  That is hard to believe.  I am pretty sure you can find something you are doing right.  If its just as simple as having your pay check directly deposited to your checking account  or have simply signed up for online banking.  It is a start.  As I always say take one step at a time to simplify your finances.  Idntifying the positive is step one.  If you can do one thing right, I am sure you can do other things to better organize your finances.

Here is what I am doing right with my finances.  I am automating my monthly savings for retirement, children’s education as well as emergency fund. This way I do not have remember to make the transfer at the once a month.

Tell me what are you doing right with your personal finances?  Look forward to hearing the positive things.



What are you doing to simplify your finances in 2010?

We all say we want to simplify our finances in 2010.  But what action will you take or have taken to simplify your personal finances in 2010.

The only way you can simplify is to take action.  Its better to take action not than later.

So I want to know from everyone what action you will be take or have take to simplify your personal finances?

Here are my actions to help simplify my personal finances:

  1. Review my regularly asset allocation to make sure I will meet my retirement goals
  2. Consolidate investment and retirement accounts to reduce the number of statement I receive.
  3. Automate remaining bills and stop paper bills.

Share with me your ways to simplify your finances in 2010.