Simple ways to organize your finances

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Here are seven tips that may help you manage your money with greater confidence.

Key points

  • When evaluating your finances, simplify the task by taking small, incremental steps, and reward yourself along the way
  • Use "found money" to increase your workplace retirement plan or IRA contributions
  • Make a list of your important short- and long-term financial goals for a clearer idea of whether you are on track
Staying well informed about your income, expenses, savings and investments requires taking a close look at your finances periodically. Ask yourself these questions: Do I want to feel more confident in my financial life? Am I motivated to make better financial choices?
While evaluating your finances can at first seem like a major chore, it can greatly enhance your sense of well-being and ability to make good financial decisions, which can reduce stress. These tips can help simplify the task. "Don't burden yourself by trying to do everything at once, which can be demoralizing," says Karen Burns, Director of Advanced Digital Solutions & Enterprise Financial Planning, Bank of America. "Start with small, incremental steps and reward yourself along the way. Get others involved and you can even make the process fun."
These seven tips can help you better organize your finances.

Discover the satisfaction of "finding" money

If you have a seldom-used phone line or multiple gym memberships, you're practically throwing money away. Start by thinking about dropping just one unnecessary item, Burns suggests. Once you see how that extra cash can slowly add up, try cutting another extra expense. Over time, this process could ultimately yield hundreds or even thousands of dollars per year in savings. Asking Bank of America's virtual financial assistant Erica to "find monthly expenses" is an easy way to help you identify ways you can cut back.

Put your found money to good use

When you eliminate an unnecessary expense, or receive extra cash from a raise, bonus, tax refund or gift, consider using the money to increase your retirement plan contributions to either a workplace plan or an IRA. Many people aim to contribute at least 10% of their salary to retirement savings, but if you can't stretch to meet that target immediately, you might try to increase your contributions by 1% or so of your salary every year until you get there. Contributing at least enough to take advantage of any matching contributions from your employer to your 401(k) plan, for example, is a smart way to boost your savings. Plus, for IRAs, you can automate your contributions using the Merrill Automated Funding Service Footnote 1 with even as little as $25 a month, making the process easy.
If you have a 529 education savings plan or would like to start one, that could be another possible destination for extra cash. Get more insights about 529 plan benefits you may not be aware of when saving for college.
Lastly, you may wish to use a portion of your "found money" to pay down high-interest credit card debt, treat yourself to a special purchase or send money to someone who could use or deserves it — payment apps that enable you to send money to family and friends can simplify the process.

Check your progress toward a goal

"Addressing specific goals, one by one, can give you a clearer and more optimistic financial outlook," says Burns. If one of your goals is retirement, use our Retirement Evaluator to see if you're on target to get there. Consider listing important short- and long-term goals, then check your progress over time to see if you are on track to meet them. If you are not, you may need to make changes to your investment strategy, like increasing the monthly amount you save, or changing your risk-reward outlook, so that you are better positioned to pursue your goals.

Consolidate retirement accounts

Over the course of your career, you may end up with multiple 401(k)s or IRAs in different places. Having so many accounts can make it difficult to keep track of your assets and feel comfortable you are appropriately invested to pursue your retirement goals. Account consolidation might help you keep your retirement plan on track and simplify your investment management. Consider combining IRAs of the same type with one institution. Also, review any 401(k) accounts you may still have with former employers. Learn more about 401(k) distribution options and other considerations when changing jobs. There are several options available and you might determine that an IRA rollover could make sense for you.Footnote 2

Simplify your credit cards

Having multiple credit cards can make it not only harder to track and control spending and stay within your budget but also easier to build up high-interest debt. If you have several cards, evaluate which ones work best for you (the cards with the lowest interest rates or the best rewards, for example) and make them your primary cards. Keep the other cards for emergencies, or for limited use, but try not to build balances on them. And if a particular rewards program isn't working for you, perhaps change to another rewards card that's better suited to your lifestyle.
Addressing specific goals, one by one, can give you a clearer and more optimistic financial outlook.
— Karen Burns,
Director, Advanced Digital Solutions & Enterprise Financial Planning,
Bank of America

Keep your beneficiaries and addresses up to date

It may seem like simple financial housekeeping, but it's easy to forget about policies or accounts that were set up years earlier. It's crucial to keep addresses up to date for:
  • Financial institutions
  • Insurance companies
  • Former employers, if they have a pension, a 401(k) or health care benefits for you
It's also a good idea to periodically review the beneficiary designations you've made (login required), especially if there have been family changes, such as a birth or a marriage. "A key benefit to this is making sure that if something happens to you, your money is going where you want it to," says Christopher Vale, Senior Vice President of Consumer Investments Guidance and Solutions at Bank of America. "Even if it's unpleasant to think about, you're doing the people you care about a favor." Once you determine that the information is up to date, simplify the process for next time by keeping a dated copy of the current information and signing up for online access, if available, to make any future reviews or updates easier.

Make organizing your finances a family affair

Encouraging family members to engage in financial matters may have benefits beyond saving money. It can foster a sense of family unity around a goal and help set your kids on a path toward financial responsibility. To make the process fun, you might set up brief, regular family meetings to review progress. Consider giving small cash rewards to those who find unnecessary expenses to eliminate. If your kids are old enough, discuss their goals and help them figure out how they can pursue them.
A financial review can help you get an idea of where your money is going, to see where changes might be made to your budget, savings and investments, and to let you plan with greater confidence that you are on track to reach your goals. The key to doing this successfully is to start small, notes Burns. "It's empowering," she says. "Once they've achieved that first step, people tend to want to take on the next thing, and then their list of things to do starts to become less of an annoyance and more something they're motivated to do."
Next steps

Footnote 1 Keep in mind that an automated investing plan cannot guarantee a profit or prevent a loss in declining markets. Since such an investment plan involves continual investment in securities regardless of fluctuating price levels, you should consider your willingness to continue purchasing during periods of high or low price levels.

Footnote 2 You have choices for what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over your 401(k) account to an IRA or convert it to a Roth IRA, roll over an employer-sponsored plan from a prior employer to an employer-sponsored plan at your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, and tax treatment, and provide different protection from creditors and legal judgments. These are complex choices and should be considered with care with your personal tax advisor. Visit or call a Merrill Rollover Specialist at 888.637.3343 for additional information about your choices.