Before we can dive in to ways to simplify your finances, we should probably go over some ways that your finances are getting, well, complicated. Here are a few ways that can happen:
- Too many bank accounts and credit cards
- Multiple outstanding debts
- Too many transactions— some regular, some irregular
- Too much paperwork
It’s probably not going to be something you can get done overnight or even this week, but there are plenty of simple ways to make your financial life more organized and therefore easier to handle. Here are 6 tips to simplify your finances!
1) Record everything.
Before you can do anything else, you need to make sure you have an accurate budget in place. You’ll want to make sure all of your expenses are included here (spending money, gas, food) or it won’t be accurate. You’ll also want to make sure you have a plan in place for your irregular expenses. There are a lot of apps that can help you track your spending, split it up by type, or even tell you what you should be saving. Mint or Level Money are good for beginners, and Fudget is a good option for those who just want to be a little better organized. This will give your budget a headquarters, and make things easier by having all of your info in one spot!
2) Go paperless, use the internet!
Welcome to the future, guys. 99% of your bills are able to be paid either through an app on your phone or online. One of the easiest ways to complicate your finances is trying to keep track of paper bills and making sure you are postmarking them by the right date, so just get rid of that issue entirely and GO PAPERLESS! Not to mention it’s great for the environment, and some places (like my bank) give you discounts for going paperless.
3) Automate whenever possible.
A lot of those bills that you are able to pay on your smartphone or online also allow automated payments— utilities, phone bills, internet, and car payments are all good examples. If possible, set up automated payments on the same date every month. This will really help keep things organized by taking care of your bills for you, and making sure they’re paid on time (the same time each month). You can even set up your pay to go directly into your account, and a lot of financial institutions will automatically place a certain amount (either percentage or dollar amount) of your check into savings! Use the tools around you!
**Be careful with this if you happen to switch cards or banks, as the payment will decline! Make sure you keep everything updated!
4) Consolidate bank accounts and credit cards.
Typically, there is not a need to have multiple checking and savings account. Consolidate wherever possible, including retirement accounts. You’re able to create your own IRA account and roll any other retirement funds over to it. Plus, you’ll cut down on any maintenance fees from your multitude of accounts. With credit cards, it’s the same concept— you might’ve opened up 3 accounts that had 0 interest at a time, but once that went away so did your need for that card. You can keep it open, if only for peace of mind, but stick to one credit card for use.
Multiple debt sources creates more bills and more complication. Paying off your debts should definitely be a main focus while you are trying to simplify your finances, and your debts should already have their own place in your regular budget. Every time you cross a debt of your list, your finances get a little more simple.
6) Utilize cash.
When starting a new cycle for your budget, whether it be a weekly or monthly thing for you, use cash for purchasing any extra treats or as “spending” money. By pulling out what you are allowed to use, in cash, at the beginning of your budget cycle, it will ensure that you don’t overspend and it will clean up your bank statement. Swiping a card is too easy and becomes second nature, so use cash as a spending limit.