If you’d like to simplify your financial life, consider these steps:
Enumerate. Start by writing down all of your sources of income and your current assets along with your liabilities. What major expenses are coming up: children, college, weddings, etc.?
Consolidate. You might have investments scattered among a dozen accounts: 401(k)s from several jobs, custodial accounts, variable annuities, 529 college savings plans, mutual funds, brokerage accounts, etc. This makes it difficult to create a coherent asset allocation and monitor investment performance.
As a solution, roll over those 401(k)s into a single IRA and consolidate your other accounts as much as possible. In addition to likely savings on account fees, you’ll get a better picture of what you have so you can make better, more tax-efficient investment decisions.
Automate. Direct automatic monthly payments from your checking account to your IRA, a 529 plan, and a taxable investment account. You also can have dividend and interest income automatically reinvested.
Arrange for as many bills as possible to be paid directly from your checking account: phone, electric, cable TV, etc. If you do the same for your credit cards, you’ll never have to worry about exorbitant late fees.
