Ways to Simplify Your Financial Life

Who doesn’t want to simplify their life, particularly when it comes to their finances?   Consolidating and automating your financial chores can make sense because it reduces the time spent organizing and tracking financial records. Below are some tips to simplify your finances:

  • Collapse the number of accounts you are using: At CMP we already ensure that you use the minimum number of accounts, but for those with outside accounts, keep things simple by collapsing all your IRAs (and 401Ks if you can) into one overall IRA account.   There may be legitimate reasons for hanging onto that old IRA or 401K but if there is not, save on paper work and time by consolidating accounts.
  • Switch to targeted funds: Again at CMP we spend a lot of time ensuring that funds are appropriately allocated and balanced. For those with accounts that are not managed, many 401Ks or mutual funds have targeted funds that are set up for the age you are planning to retire (e.g. Vanguard “2025 fund”) Such funds automatically adjust the allocation between stocks and bonds, becoming more conservative as you reach your retirement age.
  • Automate Distributions and Bill Pays: For those who are taking required minimum distributions (RMDs), automating the process will ensure you avoid penalties. CMP will work with TD Ameritrade to ensure that RMDs are automatically distributed from IRA accounts.   Others can work with their mutual fund to set up automatic RMD withdrawals. Similarly, many use automatic bill pay either through their bank or payee. Setting this feature up not only confirms the timely payment of bills but saves both time and worry.
  • Set Up a Password Manager: A password manager is a software application that helps a user store and organize passwords. Using a password manager will help access to all your financial accounts in a safe and secure manner. Efficient access to all your accounts is especially useful for loved ones who will need to access your information if you become disabled or upon your decease.

By Barry Jamieson, MA, inspired by Christine Benz, Morningstar.com

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