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5 Reasons to Apply Minimalism to Your Finances

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One of the reasons why many of us struggle with money is simply how many different things we need to juggle.

Current accounts, savings accounts, mortgages, pensions, investments and more.

No wonder there are so many “lost” bank accounts and pension funds; money that their rightful owners have forgotten all about.

If you want to manage your money efficiently then a key step is keeping everything as simple as possible.

This is a process which I myself have been through in recent years.

I’ve consolidated multiple pensions into just two (it will be just one when logistics allow).

I’ve culled bank accounts, and connected my remaining accounts so they can all be viewed in one place.

Now it’s easier than ever before for me to manage my finances in an efficient manner.

Here’s why I decided to apply minimalism to my money, and why I think you should consider the same thing…

Easier to Manage Your Money

With multiple financial accounts it can be hard to see where you stand financially.

Slimming down your accounts allows you to avoid unexpected expenses, to budget more effectively and to know exactly where your money is going at all times.

With this increased visibility so it becomes far more simple to monitor and manage your money, ensuring that you control it rather than your money seemingly having a life of its own.

Less Chance of Fraud

Sadly, we live in an age of identity theft and hacking. Your hard-earned money is under constant attack from fraudsters.

The less control you have over your financial accounts, the more likely it is that something will go amiss.

For example, consider how much easier it would be for someone to slowly empty one of your bank accounts if you’ve forgotten all about it and haven’t logged in for years.

Or imagine your bank ringing to alert you to an odd transaction. Except it’s so long since you logged in that you’ve forgotten to update your phone number, so they can’t get through.

If and when the worst does happen it’s also much easier to identify and resolve the situation.

Updating your passwords, for example, is a lot easier with just a handful of accounts.

This is in contrast to the person with dozens of different financial accounts, who needs to remember the access details for each so that they can be updated.

A Better Picture of Your Financial Health

When was the last time you looked at your pension prediction?

Do you know exactly how much you have in your emergency fund, or in your savings account?

Bringing all this together into a small number of places allows you to get an easy screenshot at a moments notice.

For the ultimate view of your financial health consider using a tool that further conglomerates all your outstanding accounts into one place.

For US readers possibly the best-known is Personal Capital, while many British readers use Money Dashboard for a similar experience.

Fewer Unexpected Expenses

I track my spending religiously, and have done so for years.

However when I first started this process my finances were in such a mess that I had no idea where my money was going.

Little wonder that I was still paying for subscriptions I’d stopped using years before, costing me thousands in that time.

Once you minimize your financial system it becomes much easier to spot anything out of the ordinary.

And when that happens it’s also simpler to investigate them and, if necessary, cancel them.

As a result, you should gain better control over your spending, which leads to a stronger financial future.

Less Time

I used to hate submitting my taxes. With so many accounts, expenses and receipts the process used to take me days – if not weeks – to complete. These days things are a lot easier with my minimal financial setup.

This means that I spend far less time than ever before combing through financial records.

Of course this is felt in other areas too.

For example, when you move house you’ll want to let all your financial providers know of your new details. That’s a whole lot easier when there are just a handful.

Indeed, it has been suggested that a big reason for all these lost accounts around the world is because people often forget to update their contact details as they change.

Conclusion

It seems to be a part of human nature that we constantly add complexity to our lives.

You start work at a company who offers a generous pension through their chosen partner. Then you move employer and find that they use a different provider. And so on.

Over the years it’s just so easy to slowly start adding ever more financial accounts.

Now is the time to carry out a “spring clean” of your finances.

Combine important accounts, eliminate unnecessary accounts. And try to bring everything together with a tool like Personal Capital.

You’ll be astonished how much easier managing your money can become with you minimize the system you use to manage your money.

Richard

Sun-worshipper and obsessive frugality blogger. For loads more money-saving advice come and join us on Facebook.

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