How many financial accounts to maintain?

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LotusHeart
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How many financial accounts to maintain?

Post by LotusHeart » Tue Apr 12, 2016 8:52 pm

My wife and I are in the process to simplify and consolidate our financial accounts. As the first step, we are trying to figure out the minimum number of financial accounts to maintain. Any comments and suggestions are welcome.

Both of us are working and here is the list of financial accounts we think we "have to" maintain

My accounts:
1) Regular bank account - checking and paycheck direct deposit
2) 401K account - with current employer
3) IRA account - roll over from all former employers
4) HSA account - with current employer
5) HSA account - with former employers
6) Roth IRA account

My wife's accounts:
1) Regular bank account - checking and paycheck direct deposit
2) 401K account - with current employer
3) IRA account - roll over from all former employers
4) HSA account - with current employer
5) HSA account - with former employers
6) Roth IRA account

Joint accounts:
1) 529 account
2) Regular brokerage account - for non tax sheltered investment
3) High yield saving account - for emergency fund
4) Regular credit card - Chase Freedom card
5) Costco credit card - membership and credit card
6) Travel credit card - for miles

So totally 18 accounts.

If you see we missed some "must have" accounts, or ways to further reduce the number of accounts. please share your thoughts.

Thanks!

jpelder
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Re: How many financial accounts to maintain?

Post by jpelder » Tue Apr 12, 2016 9:00 pm

See if you can roll old employer HSAs into current employer HSAs?

Have a single joint checking account, and use a budgeting tool to keep track of "his/hers/ours"

Consolidate bank accounts to a single bank (online only, or brick and mortar with high-yield savings)

Consolidate Roth IRAs, Traditional IRAs, and taxable brokerage to a single firm.

This won't reduce total account numbers too much, but it will make it were you don't have so many financial institutions to keep up with

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David Jay
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Re: How many financial accounts to maintain?

Post by David Jay » Tue Apr 12, 2016 9:03 pm

Are you filing jointly?
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bs010101
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Re: How many financial accounts to maintain?

Post by bs010101 » Tue Apr 12, 2016 9:04 pm

Multiple retirement accounts are unavoidable as his and hers can't be combined, and often you want to keep current 401(K) and rolled over IRA separate. But I also don't think it adds much complexity if you don't touch them often. We have three retirement accounts and the only complexity is my annual rebalance. We also have three 529s but I don't consider it to add complexity - money goes in every month automatically, and is invested in one fund. I'm not familiar with HSAs.

Multiple checking accounts and credit cards are complicated though because there are many transactions. Obviously it's a personal choice but I'm not a fan of separate bank accounts for a couple - combine and simplify. Similarly, minimize cards to avoid missing fraudulent charges, having to reconcile lots of accounts, and having to pay lots of bills.

Also, how many institutions are involved? Multiple accounts with one company seems simpler than lots of companies and logins.

Finally, there are privacy concerns but an aggregator (I use personal capital) is key to keeping on top of all the accounts.

radiowave
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Re: How many financial accounts to maintain?

Post by radiowave » Tue Apr 12, 2016 9:09 pm

Yep, that looks a lot like our accounts as well. Agree with jpelder on HSA and other account consolidation. Not sure if there is much more you can do beyond that. I slightly disagree to put all retirement accounts in one place. But if simplification is your main goal, that could work. If you want to take it a step further, do your banking and retirement accounts all in one place, e.g. Fidelity or Schwab, so that gets rid of your Chase accounts. Actually you probably could put it all under one "roof" but that would be the classic all your eggs in one basket dilemma.
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radiowave
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Re: How many financial accounts to maintain?

Post by radiowave » Tue Apr 12, 2016 9:11 pm

One other thing you might consider is to see if your current employer will allow you to pull your Rollover IRA into your current 401k . . . some do, some do not.
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livesoft
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Re: How many financial accounts to maintain?

Post by livesoft » Tue Apr 12, 2016 9:13 pm

You will have more accounts such as inherited IRAs.

We charge everything to credit cards, so the checking account has almost no transactions: Paycheck deposit and credit card bill pay.

Most of our other accounts have few, if any, transactions. Example: IRA would have one transaction per year and then goes back into set-and-forget mode. My 403(b) has no transactions. Vanguard accounts also have no transactions initiated by us, so they are set-and-forget.

The reality is that one only needs to worry about two accounts: The workhorse checking account and maybe the largest 401(k) or IRA where all portfolio rebalancing occurs. The other accounts need to be there, but they don't need to be looked at, logged into, aggregated or anything. One needs to know what's in them, but that changes so slowly that looking once at the year-end statements is all that is required.
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LotusHeart
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Re: How many financial accounts to maintain?

Post by LotusHeart » Tue Apr 12, 2016 10:37 pm

Yes - we are filling jointly.

mouses
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Re: How many financial accounts to maintain?

Post by mouses » Wed Apr 13, 2016 6:17 am

bs010101 wrote: Obviously it's a personal choice but I'm not a fan of separate bank accounts for a couple - combine and simplify. Similarly, minimize cards to avoid missing fraudulent charges, having to reconcile lots of accounts, and having to pay lots of bills.

Also, how many institutions are involved? Multiple accounts with one company seems simpler than lots of companies and logins.
I've never understood how couples manage one checking account. What happens if Person A and B both write checks during the day, how do they know they aren't going over the limit? And, what, they touch base on this every evening?

I have accounts at more than one financial institution, partly for federal insurance reasons and partly just in case something goes wrong with an institution and I temporarily would not have access to those funds. Similarly, two credit cards.

Jack FFR1846
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Re: How many financial accounts to maintain?

Post by Jack FFR1846 » Wed Apr 13, 2016 6:31 am

With Excel, I think it really doesn't matter.

You don't have 12 old 401k's sitting out there. You're not holding 100 credit cards...mostly unused.

When I came to Bogleheads, we had 8 "extra" tax advantaged from prior employers. We connsolidated them to Fidelity. Still have 2 401k's, 2 traditional IRAs and 2 Roths at Fido. I also have a single fund at Vanguard (chasing the lowest ER). Probably have at least a dozen credit cards. We use 3 at any time. I also open credit card accounts and bank accounts for the bonus money.
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celia
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Re: How many financial accounts to maintain?

Post by celia » Wed Apr 13, 2016 6:44 am

"Simplification" is meant for unwieldy assets like a dozen custodians, dozen or more holdings in an account, or a dozen of the same type of account (ie, 12 Roth IRAs for him--unless you have conversions/recharacterizations going on). Don't sweat the variety of accounts you have as those are legal or goal-specific accounts. You are doing fine.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

Careful
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Re: How many financial accounts to maintain?

Post by Careful » Wed Apr 13, 2016 2:43 pm

mouses wrote:
I've never understood how couples manage one checking account. What happens if Person A and B both write checks during the day, how do they know they aren't going over the limit? And, what, they touch base on this every evening?
Really? These days are you writing a lot of checks during the day? Do you even have your checkbook with you?? For my part, I can't understand how one wouldn't share a checking account with one's spouse. The only way I've heard it done is either joint checking, or one joint plus two individual checking accounts. If you have separate accounts, do you take turns paying for mortgages, groceries, kid costs??

Switching to one checking account would certainly be a way to reduce the number of accounts.

In the joint account, most things are on auto-pay from the checking account (e.g., mortgage) or paid on credit card (e.g, groceries) - or are very minor like paying the cat sitter or something.

But if you do write checks during the day, I'd suggest:

(1) not spending more than a certain amount without checking in with one's spouse) and
(2) having a buffer in the checking account.

Jack FFR1846
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Re: How many financial accounts to maintain?

Post by Jack FFR1846 » Wed Apr 13, 2016 2:50 pm

Careful wrote:
mouses wrote:
I've never understood how couples manage one checking account. What happens if Person A and B both write checks during the day, how do they know they aren't going over the limit? And, what, they touch base on this every evening?
Really? These days are you writing a lot of checks during the day? Do you even have your checkbook with you?? For my part, I can't understand how one wouldn't share a checking account with one's spouse. The only way I've heard it done is either joint checking, or one joint plus two individual checking accounts. If you have separate accounts, do you take turns paying for mortgages, groceries, kid costs??

Switching to one checking account would certainly be a way to reduce the number of accounts.

In the joint account, most things are on auto-pay from the checking account (e.g., mortgage) or paid on credit card (e.g, groceries) - or are very minor like paying the cat sitter or something.

But if you do write checks during the day, I'd suggest:

(1) not spending more than a certain amount without checking in with one's spouse) and
(2) having a buffer in the checking account.

My wife and I have separate checking accounts. Why?

I pay all of our credit card, kid's tuition, property tax, electric bills from MY checking account. Except for property tax, it's all electronic......but it's still from the checking account. So it can be $30k in a month when tuition is due. The statement comes in and I balance it to the penny every single time.

My wife pays a number of bills with her checking. Maybe every 3 months, she asks me to look online and tell her what's in her checking account. Yes, really.

I would never share a checking account with my wife. Our accounts are joint so I can see her account activity online.
Bogle: Smart Beta is stupid

Careful
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Re: How many financial accounts to maintain?

Post by Careful » Wed Apr 13, 2016 3:01 pm

That seems very complex to me, Jack FFR1846. How do you decide who pays for what? Is it a negotiation? What if one of you were laid off -- would he/she be broke, while the other is fine?

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Elsebet
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Re: How many financial accounts to maintain?

Post by Elsebet » Wed Apr 13, 2016 4:00 pm

mouses wrote: I've never understood how couples manage one checking account. What happens if Person A and B both write checks during the day, how do they know they aren't going over the limit? And, what, they touch base on this every evening?
While we haven't used checks regularly since the 90's, it's easy for us to check our balances on the web/mobile app to ensure we're not causing problems.

michaeljc70
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Re: How many financial accounts to maintain?

Post by michaeljc70 » Wed Apr 13, 2016 4:13 pm

Just like the underlying investments, I'm a believer in as few as needed. I have 5 accounts at 3 different companies and am going to get that down to 2 different companies (most brokerages don't offer standalone HSAs).

I have:
Taxable brokerage (Etrade)
Taxable brokerage (Vanguard)
IRA (Vanguard)
Roth IRA (Vanguard)
HSA (SelectAccount)

I plan to move the Etrade account to Vanguard. Having so many statements and logins, etc. is just a hassle if you can get around it. It also makes you incur more commissions sometimes due to a position being across different accounts.

Even if you want funds from all different places, most of the big brokerages let you buy other companies mutual funds or at least their ETFS. I remember at one time having accounts at Gabelli and Etrade and Schwab and Janus and Fidelity and .....

fcox85
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Re: How many financial accounts to maintain?

Post by fcox85 » Wed Apr 13, 2016 4:50 pm

I strive for simplicity. Here is what we have.

Joint Accounts:
Checking
Savings
All Credit Cards

My Accounts:
401(k)
HSA

Business Accounts:
Checking (wife's small business)

That makes 5 main accounts, and a few joint credit card accounts (I have some that were opened prior to our marriage, but we only use joint CC accounts now).

As to other accounts that I will need to open in the future:

Hers:
Solo 401(k)
Roth IRA

Mine:
Roth IRA

Joint:
Taxable Brokerage

That brings the total to 9 main accounts, and a few joint CC accounts. I think simpler is better

mouses
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Re: How many financial accounts to maintain?

Post by mouses » Thu Apr 14, 2016 8:10 am

Careful wrote:That seems very complex to me, Jack FFR1846. How do you decide who pays for what? Is it a negotiation? What if one of you were laid off -- would he/she be broke, while the other is fine?
Couples decide this in advance, often in connection with setting up housekeeping. Of course, if the financial situation changes, things have to be rearranged.

The buffer suggestion and contacting the spouse before writing a check just seems cumbersome to me. What if the spouse is at a business meeting, how large a buffer do you need, etc. That problem goes away with separate accounts.

Careful
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Re: How many financial accounts to maintain?

Post by Careful » Wed Apr 27, 2016 2:22 pm

mouses wrote:
Careful wrote:That seems very complex to me, Jack FFR1846. How do you decide who pays for what? Is it a negotiation? What if one of you were laid off -- would he/she be broke, while the other is fine?
Couples decide this in advance, often in connection with setting up housekeeping. Of course, if the financial situation changes, things have to be rearranged.

The buffer suggestion and contacting the spouse before writing a check just seems cumbersome to me. What if the spouse is at a business meeting, how large a buffer do you need, etc. That problem goes away with separate accounts.
Housekeeping meetings, re-jiggering things as financial situation changes is also complex...so separate accounts add additional complexity (plus just more to manage).

I would advocate for a buffer anyway (I don't like my balance close to zero), so for me there is no difference. And, again, who writes large checks anymore for unplanned purchases? Seems like a non-issue to me.

Certainly to the OP, combining accounts would reduce the number of financial accounts to maintain. As Jack Bogle said (I think), simplicity is the key to financial success. :)

Jack FFR1846
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Re: How many financial accounts to maintain?

Post by Jack FFR1846 » Wed Apr 27, 2016 2:31 pm

Careful wrote:That seems very complex to me, Jack FFR1846. How do you decide who pays for what? Is it a negotiation? What if one of you were laid off -- would he/she be broke, while the other is fine?
I pay all the recurring bills. She's paying for things like the school lunch program for our high school son. She pays for the required school laptop rental. She keeps no track of her account......we're joint and I watch it. If she's going to pay a large bill (over $300), she asks me what's in her account. We pay most things with credit cards. I tend to keep a set amount in her account at all times. About $3000. I'm working full time and she does a shift about every 2 weeks so most of the income and most of the bill paying is all me.

I don't understand how she can keep a checkbook and never balance it. I also don't understand why she can't drive a manual transmission car. But both are how it is.
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Re: How many financial accounts to maintain?

Post by KlangFool » Wed Apr 27, 2016 2:46 pm

mouses wrote:
bs010101 wrote: Obviously it's a personal choice but I'm not a fan of separate bank accounts for a couple - combine and simplify. Similarly, minimize cards to avoid missing fraudulent charges, having to reconcile lots of accounts, and having to pay lots of bills.

Also, how many institutions are involved? Multiple accounts with one company seems simpler than lots of companies and logins.
I've never understood how couples manage one checking account. What happens if Person A and B both write checks during the day, how do they know they aren't going over the limit? And, what, they touch base on this every evening?

I have accounts at more than one financial institution, partly for federal insurance reasons and partly just in case something goes wrong with an institution and I temporarily would not have access to those funds. Similarly, two credit cards.
mouses,

1) We only write check for trivial stuff. Less than $100.

2) The rest of transactions are autopay / push payment from the checking.

3) We keep about 3 months worth of expense on our main checking / bill payment account. So, even if we do not look at our account for 2 months, it will be fine.

4) We update our quicken about once per week.

KlangFool

KlangFool
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Re: How many financial accounts to maintain?

Post by KlangFool » Wed Apr 27, 2016 2:49 pm

Folks,

The minimum is 2.

So, we have

2 credit cards: Costco Amex and Chase Visa
2 Checking accounts
All others 401K, HSA, IRAs and so on are split between Fidelity and Vanguard.

KlangFool

BW1985
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Re: How many financial accounts to maintain?

Post by BW1985 » Wed Apr 27, 2016 2:59 pm

Wife and I keep everything possible at Vanguard (taxable, IRA's, 401k) & Chase (checking, credit cards)

We also have an HSA at BenefitWallet.

I just started churning credit card promotional offers but I only do one at a time to cut down on complexity and ensure I meet the minimum opening spends for the bonuses.
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

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rob
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Re: How many financial accounts to maintain?

Post by rob » Wed Apr 27, 2016 3:08 pm

My hats off to you guys with a handful of accounts - we have a stack. Just in the investment part we each have 3 IRA's, her 403B, my 401k and some brokerage accts due to stock options at different places, some utma's and some 529 plans. Rebalancing is a giant pita and we have overlapping funds all over the place due to what bucket is where and what I could balance at the time - I rationalize now and again but it's always a mess. Critically it's a single plan, so it's not a mess at the high level 8-)

Bank accts are joint - I never understood the split accts thing - most recurring bills are credit cards or direct pay and any checks are small and usually related to school book fairs or alike. I don't reconcile but just keep an idea in my head and it works for us (I think I used the credit line once when I miscalculated).

Credit cards are some combination of hers, mine and ours but I run a number for different reasons and rewards - two main cards but we have a lot overall.
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ruralavalon
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Re: How many financial accounts to maintain?

Post by ruralavalon » Wed Apr 27, 2016 3:39 pm

We have a total of five accounts.
Joint checking account
Joint taxable account
His Roth IRA
Her Roth IRA
His traditional rollover IRA

We have three credit cards.
Joint card, it's a very high limit card which we never use anymore, we keep it open primarily as a kind of emergency fund.
His card
Her card
We got the two separate personal cards just to get double the bonus miles for initially signing up.
The cards are paid off every month.
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jhfenton
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Re: How many financial accounts to maintain?

Post by jhfenton » Wed Apr 27, 2016 4:32 pm

We have the following accounts:

Asset accounts:
1. Joint credit union checking (with companion savings) (primary account)
2. Joint high-yield savings
3. Joint checking with bank holding mortgage
4. Joint brokerage
5. His Roth IRA
6. Her Roth IRA
7. His Rollover IRA
8. Her Rollover IRA
9. His 401(k)
10. Her 401(k)
11. His HSA
12. Son's 529
13. Daughter's 529

Liability accounts:
14. Joint rewards Amex
15. Joint rewards Visa
16. Joint rewards Mastercard

The only one of the asset accounts we could realistically eliminate is #3, the joint checking account with the bank holding our mortgage. It was part of their "process" to set up the checking account along with the mortgage. They said that we could close it after the fact, but it hasn't been any trouble to keep it open to hold our mortgage payments prior to their being auto-deducted from that account. I think we have $18 in it at the moment after last week's mortgage payment came out. I'll transfer next month's mortgage payment some time before the 20th of next month.

We run almost all of our expenses through the rewards credit cards, so the joint checking account is not an issue. We also almost never write any checks. We write maybe 20 per year combined, mostly for school-related expenses and mostly $150 or less. And we don't use our debit cards at all. But we've been married 24 years, and even when we did keep a manual checkbook, we did not have any issues. We seldom let the account get low enough that buying groceries (for example) would be an issue, and if we did--in my law school days, perhaps--we certainly knew it before we thought about writing any checks.

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Re: How many financial accounts to maintain?

Post by jjface » Wed Apr 27, 2016 6:54 pm

Jack FFR1846 wrote:
Careful wrote:
mouses wrote:
I've never understood how couples manage one checking account. What happens if Person A and B both write checks during the day, how do they know they aren't going over the limit? And, what, they touch base on this every evening?
Really? These days are you writing a lot of checks during the day? Do you even have your checkbook with you?? For my part, I can't understand how one wouldn't share a checking account with one's spouse. The only way I've heard it done is either joint checking, or one joint plus two individual checking accounts. If you have separate accounts, do you take turns paying for mortgages, groceries, kid costs??

Switching to one checking account would certainly be a way to reduce the number of accounts.

In the joint account, most things are on auto-pay from the checking account (e.g., mortgage) or paid on credit card (e.g, groceries) - or are very minor like paying the cat sitter or something.

But if you do write checks during the day, I'd suggest:

(1) not spending more than a certain amount without checking in with one's spouse) and
(2) having a buffer in the checking account.

My wife and I have separate checking accounts. Why?

I pay all of our credit card, kid's tuition, property tax, electric bills from MY checking account. Except for property tax, it's all electronic......but it's still from the checking account. So it can be $30k in a month when tuition is due. The statement comes in and I balance it to the penny every single time.

My wife pays a number of bills with her checking. Maybe every 3 months, she asks me to look online and tell her what's in her checking account. Yes, really.

I would never share a checking account with my wife. Our accounts are joint so I can see her account activity online.
So basically you have a joint bank account that is in two parts!

moneywise3
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Re: How many financial accounts to maintain?

Post by moneywise3 » Thu Apr 28, 2016 2:42 am

You can easily get to 10. All IRA's, Roths and brokerage can easily be 1 custodian. Maybe even same as one of your 401k carriers. Then have a joint bank account.

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happymob
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Re: How many financial accounts to maintain?

Post by happymob » Thu Apr 28, 2016 8:16 am

My wife and I currently have 20 savings and investment accounts (so no credit cards in that number). That is more than I would like and we are actively consolidating, but in a perfect world, we would still end up with:

Rewards checking account
Taxable brokerage
2x Roth IRAs
2x Workplace 403b
2x TIAA-CREF 403b from previous employers (which we want to keep for TREA and Traditional)
2x Treasury Direct account
HSA for me
2x 529 plan (1 for each kid)

Which is still 13 accounts, with the possibility of adding Roth 403b or 457 plans into the mix in the future once all out traditional IRA money is converted to Roth. Yikes.

cpw84
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Re: How many financial accounts to maintain?

Post by cpw84 » Thu Apr 28, 2016 11:19 am

I'm in the same boat as KlangFool and Careful.

My wife and I view our finances as one bucket. I am in the process of moving funds from my bank to our joint account with hers to simplify. But we use Mint and always treat it as both of our money anyway. We keep a few months of buffer, and that's something I even did when I was single because I'd rather not worry about it as much. We have a monthly budget meeting/spreadsheet and try to plan out what expenses we have coming up. If we NEED to buy anything over say, $40, we'll shoot a text or let each other know later. If we WANT to buy anything of significant cost outside of our fixed expenses and anything we have talked about already, we have a discussion. We share common financial goals. For example, we're not targeting a percentage of savings, we've set a target spend per month and we try to maintain that level without inflating our lifestyle as pay goes up. I put a spreadsheet on our fridge for each week to track our restaurant spending vs. a pre-planned target. We almost make a game of it. We also run everything through rewards cards and pay them off every month.

We have (all tracked on Mint):
My checking and savings (in process of moving, my paycheck has already been rerouted to hers and I have to switch autodrafts)
Her checking and savings
A taxable account and his/hers Roth IRAs with Vanguard
My 401(k)
My Chase Freedom card (main card for all expenses) and two old cards I keep active enough that they don't close and keep my available balance up
Her Ann Taylor Loft card (main card for all expenses) -Points go to no hassle, no discussion clothing purchases at her favorite store. This helps keep the peace.
Her Chase Freedom card - she uses this for expenses from her work that will be reimbursed, to keep it separate from general spending

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celia
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Re: How many financial accounts to maintain?

Post by celia » Thu Apr 28, 2016 2:50 pm

Lotus, You look like you have everything organized well. But I think you may need MORE accounts. REALLY!

Your 529 account implies you have kid(s). If they are old enough too have part-time jobs, you could start Roth IRAs for them. I also wouldn't count credit cards accounts as accounts. Do you count your mortgage receiver as an "account" or the dentist as an "account". Yes, you may have "account numbers" at these places, but they are not investments, so I would only count accounts where you can control the investment and balance.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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