How Simplifying Your Accounts Can Improve Your Finances
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With a sign up bonus here and a positive referral there, it can be easy to amass a small army of financial accounts. But if you start simplifying and closing the accounts you don't use often, the benefits can be substantial. (See also: Simplify Budgeting With Personal Money)
Keep Better Track of Your Finances
One way to start improving your finances is to look at your habits, but if you have too many accounts, it can be hard to figure out your exact situation. When you have fewer accounts, it's much easier to keep track of the history of your spending and investing habits.
Have the Information Uncle Sam Asks For
Sometimes, the IRS expects you to come up with ancient documents. It's best that you have the documents ready (unless you like paying for penalties you might be able to avoid otherwise), and it's easier to access them when you have fewer accounts.
Minimize the Amount of Cash That's Earning Nothing
You likely have a small bit of cash in every one of your accounts. And it's likely that more accounts you have, the more cash you have earning you nothing. I know even the best online savings accounts are earning you only 1% right now, but that certainly beats the 0% that other accounts might be giving you.
Have More Time
Whether it's looking through statements, trying to remember your password for an account you haven't checked for ages, or simply keeping track of it all, money management can take time out of your precious day. That's time away from productive work, time away from family, and time away for your leisure activities.
Pay Fewer Fees
The fewer accounts you have, the more cash you can put towards each one. This means potentially spending less on overdraft fees. Even if you don't have more money in the accounts, just having simpler finances will reduce the chances that you'll forget about little details like moving money around to cover bills and incurring late fees.
Make Planning Easier
When you have more time, less stress, and more money, you will likely be more motivated to actually start planning for your financial future. Of course, it helps that you now have fewer accounts that you need to take into consideration, too, but that's just the icing on the cake.
How many accounts do you have?
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.