That impenetrable pile of checkbooks, bills and brokerage statements on your desk is trying to intimidate you.
You know your finances are too complex and that efficiency would save time and money. But the pile likes being a pile, and it’s telling you to back off.
Don’t give in. If you can take control of your finances, your investment of time and money will return dividends in both for decades to come.
It’s all about simplifying.
With technology – such as automatic bill-paying, direct deposit and computerized budgets – you can take a lot of the drudgery out of your financial chores.
By working with an adviser to develop a comprehensive financial plan and by reducing the number of accounts you have, you can gain a better picture of your situation so that all your efforts keep you moving in the right direction.
The pile wants you to think you don’t have enough time to attack it. But that’s not true.
“Although people have good intentions, they get caught up in the trap of living their lives,” says Lynn Lawrance, a certified financial planner at Financial Network Investment Corp. in Dallas. “As a result, their important financial decisions take a back seat to living for today.”
The pile wants you to think it’s always working in your best interests. But that’s not so, either.
Take investing, for example. Studies show mutual funds that simply follow an index do better on average than more complicated, managed funds.
“Society seems to view those who have a simple, nonhectic life as people who are not successful, retired or, frankly, just not motivated to improve their lives,” says Bryan Clintsman of Clintsman Financial Planning in Southlake, Texas.
That’s just the pile talking.
Simplifying your financial life isn’t rocket science, but you shouldn’t throw up your hands and think that things will somehow fall into place.
Take a financial inventory. That includes looking at your income, expenses, bank and retirement accounts, and Social Security benefits.
Use debit cards to pay bills. They’re quicker than writing a paper check.
Automate financial transactions. Pay routine bills by having the money automatically drafted from your bank account.
Reduce your accounts.
Organize your personal papers.
Set up folders for all accounts. Get rid of the documents you don’t need.
Save credit-card and bank-account statements for about a year if they don’t have tax or other long-term significance, the Federal Deposit Insurance Corp. says. The rest should be maintained up to seven years.
If documents involve the purchase or sale of investments, keep them for as long as you own the investment. Be sure to shred unwanted documents containing personal information.
Use direct deposit for your paycheck, pension or Social Security benefits. You’ll get your money faster and you won’t have to worry about thieves stealing your check.
