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Clearing Clutter From Your Financial Life: A How-To Guide

Julie Fox  |  November 13, 2024

Just like our closets, our financial lives might need an organizational overhaul. Here are the keys to clearing clutter when it comes to your money.

Just like our closets and kitchen cabinets, our financial lives may be littered with clutter. Instead of clothes we haven’t worn in years, or 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 too many 401(k) accounts from past jobs. 

It can be difficult to keep track of all of these accounts, not to mention the myriad of documents and paperwork that accompany each aspect of our finances. That’s why, keeping it simple is sometimes the most effective money management tool. Read on for three tips for clearing clutter from your financial life.

FROM CREDIT CARDS TO INVESTMENTS, TAKE STOCK OF EVERYTHING

While it may make sense to reduce and 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 first.

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To do this, it’s important to create a list of all of your different credit cards, bank accounts, retirement accounts and investment accounts. This will help you figure out where you stand and is an important first step to clearing financial clutter. Having too many accounts is difficult to keep track of. Especially with old 401(k)s from past employers, those might be worth rolling over into an IRA. 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.

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 digitally – is a key way to organize all of your important financial documents in one place. Even if you end up keeping all of 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 50 different stocks and companies is much more difficult to keep track of than if you were only invested in 20. 

It may be worth speaking to a financial advisor to develop a plan for not just simplifying your investments (which may very well involve selling underperforming stocks) 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 advisor, you’ve probably already had these conversations on at least a quarterly basis. 

If you’re not working with a financial advisor, it’s important to take some time each quarter to review your portfolio. Some rebalancing may be needed to not just de-clutter your investment accounts, but also to ensure you’re not too overly exposed to one particular stock sector. Diversification is important in almost any market environment. 

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: do you find yourself continuing to open new credit cards? Did you switch jobs and now have yet another 401(k) account? 

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, speaking from experience, getting your financial house in order is so worth it, and in the long run, it can save you both time and money. You’ve got this!

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