Most clutter is obvious: the stacks of papers on the desk, the recipes torn from magazines or printed from websites, the collection of cords, cables, and power supplies that seem too valuable to toss. I once wrote an entire website about how to deal with it!

But what about financial clutter? The symptoms are more subtle, but just as revealing if you know what to look for.

Answer these questions to see how you stack up when it comes to financial clutter.

  1. Do you have unopened account statements lying around?
  2. Have you missed paying a credit card bill without even realizing it?
  3. Are you a little fuzzy about what happened to your retirement account at a former employer, or whether you even had a 401(k) at that employer?
  4. Do you have prepaid cards or gift cards that you forget to use or have misplaced?
  5. Did you or your relatives over-contribute to your kids' Coverdell Education Savings Accounts?
  6. Are you paying small-account fees to a broker, mutual fund, or other investment company?
  7. Do you open a new IRA each year when you make your annual contribution?
  8. Have you overdrawn a checking account or been hit with fees because your balance is too low?
  9. Do you get so many alerts from your accounts that you've stopped reading them?
  10. Do you work with more than one financial adviser?

A yes to any of these questions could indicate financial clutter. Here's why, and what to do about it:

  1. Unopened account statements could be simply an indication of procrastination, denial (for example, about how much debt you have), or disinterest. But looking deeper, are too many statements contributing to the problem? Consolidating accounts could help.
  2. Not realizing that you missed a credit card payment could mean that you have more cards than you can keep track of. Carry just one or two credit cards. Choose the ones with the best interest rate or rewards, and lock the others up in a safe place. Avoid applying for new cards.
  3. The more jobs you've had, and the more employer retirement plans you've participated in, the easier it will be to lose track of them. You can roll the balances in those old plans into an IRA or into your current employer plan. Learn more about rollovers in Rules for Taking Distributions from Tax-Deferred Retirement Savings Plans.
  4. Having several cards with balances on them means that you could be paying fees on multiple cards, losing money when the cards are misplaced or lost, and missing out on the protections against fraud and theft that other types of accounts offer. See if you can transfer balances to consolidate, or spend down the balances. If you often receive gift cards as gifts, talk with those friends or relatives about different kinds of gift giving, such as making donations in your name.
  5. Saving toward your kids' college is admirable, but paying penalties isn't. If there is more than one Education Savings Account naming a child as beneficiary or multiple relatives are contributing, it can be hard to know when you've reached the annual limit, which is $2000 for each child – or less or even zero if your income exceeds certain limits ($95,000 to $110,000 for a single filer, or $190,000 to $220,000 for married filing jointly). You can consolidate accounts by rolling one account into another, the same way you roll over an IRA. Check the rules in the official IRS publication.
  6. When you first start saving or investing, you might have to pay fees because your account balance is small. But if you're paying small account fees because your money is spread across multiple institutions, it's a sign of financial clutter. For retirement accounts, rollovers are the tool that allows you to consolidate accounts. For non-retirement accounts, things may be a little trickier because of potential taxes if you sell an investment in order to transfer the money to another account. To avoid taxes, see if you can transfer the investment without selling it.
  7. Having numerous IRA accounts is unnecessary, creates lots of paper, and will become a real headache when you reach age 70 and ½, and have to take required minimum distributions each year. Decide which account is the one you'd like to keep, and contact them about helping you rollover the money from the other accounts.
  8. This could be a result of financial difficulties or other issues. But it could also indicate financial clutter, especially if you have more than one checking account. Having multiple accounts well for many people, such as couples who divvy money up into yours-mine-ours accounts. However, if it's gotten harder to keep track of those different account balances and you're paying the price in overdraft fees or low balance charges, it may be time to consolidate so that you have fewer accounts to monitor.
  9. Alerts are only helpful if they haven't become "noise." If you're not reading them, you're getting too many. Cancel some of the alerts, or set new parameters for the triggers (such as larger dollar amounts) to reduce the number of alerts.
  10. Choosing a financial adviser is a big decision. Some people hedge their bets about who will make the best investment choices by using more than one person. Others split their money up among multiple advisers because they don't want any one person to know everything about their finances and/or they don't fully trust the adviser. The result can be an inefficient, poorly coordinated set of investments. Choosing an adviser, or thoroughly evaluating your current adviser, may give you the confidence to work solely with one person. Check our website, Choosing a Financial Professional, for help.

So, do you have financial clutter? Will you try some of these ideas to reduce it? Some may work well for you, others may not be appropriate for your situation. And there may be risks and downsides to some of these strategies.

Do you have other ideas about how to reduce financial clutter? Send me your thoughts in the Comment section below.