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.




  1. says

    Another easy place to start is your monthly income and expenses. Are you spending more than you earn? If you are then you have troubles ahead. If not then you can start to invest immediately. It is as simple as that sometimes. Spend less than you earn, save the extra and be happy to have your life and finances in order.

  2. B Simple says

    I would agree. Understanding the inflows and outflows is great place to start. Having positive cashflow at the end of the month allows you to do many things.

  3. says

    It’s good to think about this, thanks. We closed out three old savings accounts last year to consolidate our funds. The interest rates they used to offer were long gone — no sense in messing with extra paperwork if there wasn’t an additional benefit.


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