We have 168 hours in one week where we spend 56 hours sleeping and 40 hours working from Monday-Friday, leaving us with 72 hours of personal time. However, if “personal” time includes commuting to and from work; shuttling the kids between daycare and karate, or baseball, soccer, and football practice; or running a home business, the amount of personal time you have is much less. I won’t even go into the amount of time spent on Facebook or Twitter, or both.
Reduce the number of brokerage accounts
If possible, reduce it to just one broker. The fees from maintaining multiple accounts with multiple brokers, whether they are full-service or discount brokers, will cost you more in the long-run. Consolidating your brokerage accounts will reduce maintenance fees and, because of the larger balance, garner more attention from your broker.
Set up a simple record-keeping system
- A folder or box for all incoming bills that need to be paid.
- A folder for items connected to and corroborating this year’s tax returns such as bank, brokerage, and mutual fund statements; life insurance, homeowner’s and car insurance records; and stubs and canceled checks proving you’ve paid your bills.
- A folder for all home-improvement records over the years, which will be useful when selling your home and offsetting the gains realized on the sale.
- Accordion folder for tax returns from the last four years, with supporting paperwork.
- A three-ring binder with an inventory of your household possessions in the event of a major loss such as theft or disaster, including photos, video, or CDs of the possessions.
Store the binder in a safe-deposit box along with irreplaceable items such as birth, marriage, and stock certificates, and list your spouse and children as co-owners of the box. Add safe-deposit box insurance to your homeowner’s policy if you store valuables such as jewelry or coins.
Invest your money automatically
Setup direct deposit with your employer so that part of your paycheck goes to your mutual fund or 401(k) plan. Alternatively, setup automatic deposit with your bank so that a preset amount is transferred to your IRA.
Reduce the number of mutual funds
You need just four mutual funds:
- Growth fund
- Equity-income/growth-and-income fund that owns dividend-paying stocks
- Small-company fund
- International fund
Cut up all but two of your credit cards
Even though we may have multiple credit cards, spanning multiple credit card companies and retail stores, we can get by with two credit cards: a charge card such as American Express, and a low-interest MasterCard or Visa for everyday expenditures. Less credit cards means dealing with just one or two bills per month.
With our busy lives, simplifying our financial lives tends to become a less pressing matter than going to the doctor or creating an efficient schedule for the extracurricular activities with which your children participate. Organizing your financial documents should take place on a regular basis throughout the year and not just in the months leading up to April 15. You will save yourself a lot of time and energy if you organize your supporting financial documents when you do not need them for now.