In the IT world, we follow the KISS (Keep it simple stupid) principle.
What it basically means is to keep everything simple as simple systems work the best and all unnecessary complexity needs to be avoided.
We follow this principle in our work but tend to forget it our daily and financial lives.
The daily life discussion is for another post. Let’s discuss about our financial lives which have become a mess because of the choices we have.
Most of us have a multitude of savings / investment accounts, 2 – 4 insurance policies and 5 – 10 mutual funds, a number of credit cards and a host of other investment products.
We tend to forget that we need to simplify things. We should have only those financial products which we can track or keep a tab-on OR we can lose our way in the quest to achieve financial nirvana.
I know of relatives who have 8- 10 savings accounts and they have forgotten about them or are simply least bothered to close them since they have moved or have misplaced the documents and now don’t want to go to the hassles of getting it done. This is a basic NO-NO.
How many times you have come across a financial product or some scheme which showcases fancy returns in the product brochure which you don’t understand a single bit of it but buy it as a persuasive relationship manager or a friend or even a relative was pushing it. If you don’t understand it, then why are you buying it ? It is you hard – earned money that will go down the drain. We should think and then act especially where money is involved.
In my opinion, 1 – 2 savings accounts, 1 – 2 policies (term and health only) and 2 – 3 Mutual funds which you can track and 2 credit cards are just fine for a normal human being.
One credit card would be the smaller limit one which you can use to pay bills and earn points and the other one with the larger limit which can be kept for emergencies.
So how do you intend to simplify you financial life ?