Organize Your Financial Life: Tracking your Accounts

We all experience a change in circumstances at some point;  a new job, a move to a new city, getting married or divorced, etc. And with each of these changes, our financial information can become more complex, spread out, and hard to keep track of. Tracking all your financial accounts, where are they and what’s going on inside of each of them is a vital step to being in control of your financial life. This includes bank or credit union accounts, credit cards, loans, retirement savings, health savings accounts (HSA) and investments. Do you know if you’re being charged fees in these accounts? Are your balances going up or down? Are there features or options available you’ve forgotten about? Knowing where you stand on each of these is key to your financial wellness. (Note: BrightDime is a great way to track all of these things!)

Bank accounts: A new bank opens near you, or you moved and opened new accounts at a local bank and never got around to closing out your old ones. Your five year certificate at deposit (CD) the old bank matured, but you moved and they don’t have your updated contact information. If you have accounts at several financial institutions, look at the account fees, required minimum balances, and interest rates to see if it makes sense to combine, or close, any of them. The account fees and minimums can change frequently so take a quick look at your statement, online account details, or call your bank to see how you can avoid them. If you do decide to close any of them, make sure you update any automatic deposits or drafts attached to that account.

Credit cards:  We’ve all been standing there at the checkout register when the sales clerk asks if we want to save 10% today by opening a store credit card. While there may be some nice perks with these retail cards (early sales, discounts, etc), they are usually limited to use in that store and tend to have the highest interest rates. Having multiple credit cards makes it harder to keep track of your balances, interest rates, fees and most importantly your spending. It also increases the possibility of building up a lot of high-interest debt and missing required payments. If you have several cards, review which one is the best fit for you (low annual fee, lowest interest rate, best rewards) and make it your primary card. Put the other cards away in a drawer for emergencies or for limited use, but try not to build balances on them (just don’t close the accounts all at once, it could impact your credit score).

Retirement and Investment Accounts: The average person changes jobs about 10 times in a lifetime and may accumulate several different 401(k), Individual Retirement Account (IRA), Health Savings Accounts (HSA) or investment accounts at different institutions. If you have several retirement and investment accounts out there, keeping track of these account balances is very important to knowing your overall retirement readiness. You may consider consolidating some of them where it makes sense and and where the law allows. But not all accounts can be combined: tax-advantaged and taxable accounts, for example, will always need to remain separate as those dollars cannot be commingled. The same is true for IRAs that are funded with pre-tax or after-tax contributions. Where consolidation is available, having a combined view of your balance and investments will help you manage your overall asset allocation and keep fees low. It may not make sense in every case, but it is worth researching if you have several out there.

Another vital part of tracking your accounts is updating the beneficiaries when life events mean things have changed (marriage, birth, divorce, etc) to ensure your accounts are paid out according to your wishes if anything happens to you. You should also update your contact information (address / phone / email) at least annually because if your prior bank or employer can’t find you, your account can go dormant and the money will get turned over to the state. That’s generally after three to five years, depending on the state’s requirements and it remains there until claimed. (Every state in the U.S. has an unclaimed property program that works to connect the owners of lost or forgotten assets with their money such as old checking or savings accounts, refunds, old security deposits and more).

Consolidating where possible will make it easier to manage your finances, but it’s fine to have multiple accounts as long as you have a good tracking system (like BrightDime) and an overall view of your total financial picture. Knowing where your money is and where it’s going is key to your financial future and meeting your goals.