From Here to Financial Happiness

Day Seventy Imposing Order

Suppose you dropped dead tomorrow. I know, it isn't exactly a pleasant thought. Still, at that juncture, all your financial problems would be over. But for your family, they might be just beginning, especially if your affairs are a mess. How difficult would it be to settle your estate and wind down your financial life? To make things easier on your family, maybe you should do a little tidying up now, just in case.

Many of us fall prey to what I call naïve diversification. We imagine that we're safer if we use multiple financial advisors, have multiple bank and brokerage accounts, and own multiple funds that invest in the same market sector. But in most cases, this extra safety is an illusion. My advice: Limit yourself to one financial advisor, one bank, and one brokerage firm or mutual fund family, and favor target‐date funds and total market index funds that give you exposure to broad market segments. That'll keep your financial life simple.

Also look to limit the financial papers you keep. Hang onto seven years of tax returns and the supporting material, and throw out the rest. If you're brokerage firm or mutual fund company provides cost basis information, there is no reason to keep anything but the latest statement – and even that's likely available online.

In addition, keep only the latest copy of your insurance policies, unless you have an ongoing claim that isn't yet settled or you fear a lawsuit, in which case you should save copies from ...