Spring Cleaning Your Finances With 20 Or Less Accounts

Forbes Advisor conducted a pulse check on customer sentiment in 2023 and found that 75% of respondents reported they were either “very concerned” or “somewhat concerned” about their family’s financial security. One of the most important money habits I teach as a financial coach to reduce money anxiety is to curate your financial accounts to 20 or less.

The reason I see most people get overwhelmed with money management is simply too many accounts, so when they try to overlay multiple goals over a disorganized list, it can get messy and confusing quickly. Here are four steps you can start today to get your finances streamlined.

First, Gather Your Accounts In One Online Platform

Your net worth is calculated by taking the monetary value of everything that you own and subtracting out the monetary value of everything that you owe, including credit card debt, car loans, mortgages, student loans and other forms of debt.

Before tackling any financial goal whether it’s paying down debt, saving or investing, it’s important to understand each account you own fits into your overall financial well-being as measured by your net worth.

I teach all of my students to track all of their finances in one online system such as:

• Monarch Money (What I use personally for a nominal monthly fee)
• Empower (Free tool in the U.S. but be prepared for a sales pitch every now and then for your investments
• PocketSmith (Tool if you’re based in Europe)

You may also find a net worth tracker included in the dashboard of one of the banks you do business with already. These tools reduce the busywork of updating manual spreadsheets.

It may be a pain to find the usernames and passwords, but curating your accounts will help you see each account’s relative impact to your finances. For example $5,000 worth of credit card debt is more impactful to someone whose net worth is $50,000 versus $500,000.

Second, Organize These Accounts Into The Financial Five

As you bring your accounts into one platform, organize them into these five financial categories (these systems will often already do this for you):

• Cash and cash equivalents, including checking, savings, certificates of deposit, money market accounts and similar accounts
• Investments including retirement accounts, employer sponsored accounts, brokerage accounts, and smaller investor apps such as RobinHood
• Property, including any property that could be liquidated for cash such as your vehicles, real estate, art or other items of value that you consider to be part of your wealth
• Credit cards, including ones that you may not actively use but are still open
• Loans, including student loans, personal loans, car loans, mortgages, medical debt and tax debt. Any debts you owe other than credit cards

The first three categories are assets that will help you build your wealth and add to your overall net worth. The last two categories are liabilities and will detract from your overall net worth.

By organizing all of your accounts in this way, you see the holistic picture of where all your money is. As you build better money habits, you can shift your attention and focus to the first three rather than the last two.

Third, Give Every Account A Unique Name And Distinct Purpose

Someone who curates is different from someone who collects, and most people collect money accounts rather than curate. Curation means you:

• Take special care and consideration of each item;
• Have a level of discernment beyond surface level;
• Have an intellectual curiosity about how to find the best ones;
• Enjoy the process of accumulating them; and
• Know which and when to let go

Then edit the name of each account to reflect its purpose, and how you feel about it. Names of your accounts should reflect your attitude and whether you want them to stay or go. Be creative, clever or just plain honest about what the accounts do for your wealth building journey. Have fun with the names so that looking at your finances is more joy and less drudgery.

Fourth, Close and Consolidate to Less Than 20

Naming each account uniquely helps you figure out if you have multiple accounts performing the same purpose, or any that don’t have a concrete purpose. Question why if you have more than 4 accounts in any particular category.

For example, having more than one checking account is more often than not, highly unnecessary and a missed opportunity to earn more interest. I also often encounter people who have multiple savings accounts without anything in particular they are saving for or just a blanket “just in case” versus any real intention behind stashing that cash. Start with curating down to:

• One checking account for daily expenses
• One savings account for emergency fund
• One savings account for long-term savings goal
• A business checking account (if you own a business).

Advanced investors may have more than four investment accounts, but start organizing such as:

• Rolling over old 401(k)s into your current 401(k) for simplicity or consolidating into one individual retirement account;
• Reviewing the expense ratios and fees of your investment accounts;
• Closing brokerage accounts if you’re not tax-advantaged accounts to their IRS limits; and
• Recovering forgotten investment accounts.

I also commonly see students using brokerage accounts to invest in the same things they could do with an account like a Roth IRA and save more on taxes.

Think of each of your financial accounts as a separate handbag. Having multiple checking, savings, investment accounts and credit cards is like carrying around an armful of handbags around town with just a little bit of money in each. It’s not efficient and it feels a little silly (though it would be nice if they were all luxury!)

Just like carrying all those bags can weigh you down, having more accounts to manage than you really need can weigh you down financially and emotionally. Slowing down and reducing the number of financial accounts to manage on a daily basis to under 20 total will significantly boost your financial progress, and reduce the overwhelm.