How many financial accounts do you have? Savings, checking, investment, and retirement accounts. I bet you have at least 5, but why so many? I'm sure every account you have doesn't have a purpose too. Having 3 savings accounts probably isn't much different than having just 2 or 1, so why keep them? I don't think you should.
An enormous part of personal finances is the psychological side and that's important to understand. Consolidating down to just the accounts that have a purpose will be a psychological action that will improve your finances. Consolidating down to just the accounts you need might not put you in a better position financially, but it will help your finances be less overwhelming and easier to manage. Of course, these outcomes may lead to financial gain, but that's not the point. We want our psychological side of our personal finances to improve.
Follow these steps to consolidating your accounts
There are two ways you can consolidate. First, you can consolidate down to have less accounts (e.g. having 1 checking account, instead of two). Second, you can consolidate down to one platform (e.g. having a savings account and an investment account at the same bank, instead of at different banks). For you, it will be a combination. The goal isn't to consolidate down to one account. The goal also isn't to get all your accounts on the same platform. The goal is to simplify your finances.
Below you'll find my consolidation as an example. I haven't completed the entire process yet, but I'm working on it now. I wanted to share it to help you understand how to consolidate your own finances.
1. List of accounts and their platforms
2. For each account, write the purpose for it. Okay to leave blank.
3, 4, and 5. Consolidate, Perform, Improve.
In steps 3, 4, and 5, you can see I consolidated to what I needed and then changed some of the accounts to get the maximum benefit for the purpose I have. For example, switching from Wells Fargo Savings to Betterment increased my yearly interest from <.01% to 2.68%, which is pretty close to inflation. I switched my individual brokerage account from Wells Fargo (who had a trade fee) to a company that doesn't have trade fees. Then finally, I consolidated my retirement accounts onto one platform, Fidelity. Then, I closed accounts I just don't use anymore, like my old checking account and Acorns. They served a purpose at one time, but they don't anymore.
I consolidated down from 11 different accounts to 8. My platform count (5) stayed the same, but I improved many of my accounts by changing platforms, whether they offer lower fees or higher interest rates. Overall, it's less overwhelming, easier to manage, and more financially beneficial.
Your plan will probably look totally different then mine. The important part is that you choose a consolidation plan that fits your finances the best. Determining the best plan for your consolidation might be hard, so please reach out to me. I'll help for free.
I do have one announcement. We're starting to create social media accounts for Better Budget. The first is @BetterBudgetCo on Instagram, so please follow! More social media accounts to come. I hope you enjoyed reading Better Budget and that it helped improve your personal finances!
Better Budget Co
Your guide to all things personal finance. We're big fans of goal getting budgets, debt fee living, and a good cappuccino.
My name is Corey and I have a passion for budgets and personal financing. I can talk about it for days (weirdly enough). Hope you enjoy the blog!
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