[sniplet organizing your finances]

Over the past year, we’ve managed to get rid of a significant amount of physical clutter that was lying all around our home. You name it and I’d bet that I had it — somewhere. Minimalism has made our home simpler to manage.

Driving to work, I felt that the same principles could directly be applied to one’s personal finances as well since most of us do have a lot of financial clutter in the form of unused bank accounts, investments we’ve no idea why we invested in, multiple credit cards, etc. Financial clutter tends to distract us from achieving our financial goals and causes much stress.

I’ve had a lot of financial clutter too in the form of old salary accounts that weren’t closed (and then stressing myself out to meet minimum balances in each of those accounts), an endowment life insurance policy that I bought out of personal obligation (and then stopped paying the premiums), a personal credit card from American Express (that came with the corporate one and that I recklessly charged), and such.

I’ve managed to rid myself of most of these. It’s honestly liberating when you get rid of your financial clutter. I now choose each item in my personal finances with due diligence. That said, here’s an acid test that you should subject each financial instrument that you have to.

Each financial instrument that you have as part of your personal finances should financially — not emotionally or otherwise — justify its existence. If it doesn’t, get rid of it.

Do this and I guarantee financial simplicity and peace of mind.

What do you think? How do you get rid of your financial clutter?