As we age, it becomes more important to consolidate your finances due to later in life planning. After all, should something happen to you, you don’t want your family to have trouble accessing your various at a number of different banks or institutions. This is a typical problem for many individuals. It is common to accumulate a number of accounts over time and it can become difficult to keep track of where your finances are located. This can also make it difficult for friends or family members to take over your finances should they need to. Introducing financial consolidation, which can help you and your family later in life.

Financial Consolidation and “Account Sprawl”

Many individuals find that their finances can end up being spread across several brokerages, investment accounts, and retirement savings. Having this type of array is called “account sprawl” and can make it very difficult for friends or family members to take over your finances should you no longer be able to manage them. 

Consolidating your finances can help both long-term plans and day-to-day money management needs. 

Life is Easier When Accounts are Under One Roof

It may be best during your later-in-life planning to consolidate your financial assets at one brokerage firm. In addition to offering investment advice and long-term planning, many firms are knowledgeable, flexible, and convenient. This can also simplify your taxes and makes it easier when you are traveling. 

Benefits of Financial Consolidation

There are a few plus sides to consolidating your finances and bringing everything under one roof. Here are just a few:

Higher Interest Rates

Consolidating your finances into one, rather than many savings accounts, could garner you a higher interest rate for your account. When your money is divided between many savings accounts, they will yield a lower balance and may not reach the minimum requirement for those institutions. However, should you choose to pool those accounts together in a single account, you could qualify for a higher tier of interest for your savings. 

Pay Fewer Fees

All paths to wealth management and growth involve avoiding unnecessary fees. Some banks may charge fees on accounts with low balances. Consolidating your money could avoid some of these low balance fees since all your money will be in one place.

Taxes Made Easy

Most of the time, interest earned from your savings accounts is taxable. This means you should be reporting it to the IRS. Keeping your money in one place could make this much easier to calculate.

Get Better Advice

With your accounts being spread out with account sprawl, it may become harder to get a comprehensive picture of your finances. When all your accounts are at one institution or brokerage, your advisor has a better, more holistic view of your financial situation and this enables them to provide comprehensive advice. 

Manage Your Savings More Easily

Managing your finances gets a whole lot simpler with all your accounts in the same place. This eliminates the need to remember multiple account passwords or logins and you can get a complete view of your finances since they are not spread out over many institutions.

Steps to Financial Consolidation

Step 1. Set Up a Savings account at Your New Bank

If you have already done this, feel free to skip to Step 2. If not, it usually only takes a few minutes to open a new account online. Simply, make a deposit and wait for your money to clear and you are good to go.

Step 2. Move Your Balances and Direct Deposit to Your New Account

You can set up links between your new and old accounts and transfer funds. Then, change deposits to your new account by providing your old bank with the appropriate routing number.

Step 3. Close Out Your Old Accounts

It’s best to leave your old accounts open for a few weeks to a month, just in case any unexpected transactions go through. Once you are sure your ducks are in a row, contact the banks for instructions on how to close out these accounts. Often, its as easy as sending a letter with your signature. After that, you should be all finished and ready to save with your optimized strategy. It’s always a good recommendation to talk with a financial professional who can help you navigate simplifying your finances and consolidation. 
Don’t let the future catch you off guard and start planning today with this FREE eBook, Plan the Future for You and Your Spouse’s Long-Term Care.