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Are you looking for some easy to follow financial tips? I’m always looking for ways to make my life easier. Especially when I was working long hours at a job I didn’t love. I didn’t need the extra stress of worrying about money as well.
Why you should simplify your finances
Why should you simplify your finances you ask? Let me tell you why.
Simply stated, it’s easier, and less stressful, to keep up with your finances if you keep them simple.
In today’s world, we’re pulled in so many different directions. There’s kids, their extracurricular activities, PTA, homework, spouses, career, housework, the list goes on. It’s hard enough balancing it all without having to worry about missing payments, sticking to a budget, and saving for the future.
So simplify your finances, and make managing your responsibilities a breeze. Make the everyday tasks simpler and make your life easier. This leaves you more time for the things you enjoy, like rest, relaxation, and time with family.
1. Automate
The simplest step to simplifying your finances is to setup automatic payments for reoccurring payments.
The more financial noise, or things you have to touch or remember, the more prone you are to making a mistake. If you have one thing to manage every week, that’s easier than managing 10. You’re more likely to miss a payment or forget to put it in the mail when there are more items. It’s sheer statistics.
You can easily setup automatic payments with most financial institutions to pay your bills regularly each month. If your lending institution doesn’t offer it, you can use the online bill pay through your bank. Then you won’t even have to think about making the payments each month, it just happens automatically. This will also save you on late fees when you forget to put your payment in the mail.
Some items you can setup automatic payments for are auto loans, insurance, mortgage payments, phone, internet, TV.
2. Separate
Complexity almost always brings more stress, and this one might sound like it complicates things at first but hear me out.
Setup a separate bank account to separate automatic payments from every day spending. It helps me to have a separate checking account for paying the reoccurring payments. That way you don’t have to worry that you might write a check that will cause one of your regular payments to bounce.
You won’t have to think about what upcoming reoccurring payments are scheduled. First, calculate how much your monthly payments total.
Then, divide that by how many paychecks are in a typical month.
Have this amount directly deposited into your automatic payment account from every paycheck.
Bam. You don’t even have to think about it. You know there will always be enough there to pay the necessary bills.
You should start with one month’s expenses in the account for cushion for all of the payments that will come out in the first month.
3. Pay yourself first
This concept entails you set aside money for savings before anything else. You take this money out of your budget before you pay your bills, buy groceries, or splurge on something special.
The easiest way to do this is to setup automatic transfers into your savings account. You can also setup direct deposit into your savings account out of each paycheck. This makes it automatic, so you won’t even miss that money and you won’t have to remember to do it!
Remember to include it in your budget as an expense.
4. Pay with cash
There’s something about using cash that makes us not want to spend it. We tend to spend more freely when we use a card without really thinking about how much you’re spending.
Dr. Drazen Prelex discusses the loss of a so-called “moral tax” in this article about the psychology of spending. He discusses the disconnect between the joy of buying an item and the pain of paying for the item when purchasing with a credit card, which removes the “moral tax” on the purchase.
It’s also easier to lose track of your spending with a card. Until you get the bill at the end of the month and see how much you actually spent and have to actually pay for it.
5. Ditch the store cards
Get rid of all of those store credit cards.
Pick one card to keep in your wallet. This will reduce the number of bills you get in the mail each month, creating less mental stress about remembering to pay them.
You will also be able to keep better track of your spending because you don’t have so many places to spend from.
BONUS: When you have fewer cards to carry in your wallet, you can carry a smaller wallet, maybe a smaller purse. BINGO! I’m in!
6. Cancel unused subscriptions and memberships
Take a look at all of those reoccurring charges you have each month – gym, fitness, streaming subscriptions, magazines/newspapers.
If you haven’t used something in the last 30 days, it’s time to seriously think about cancelling. Do you have magazines piling up on your coffee table that you never have time to read? Save the money and cancel the subscription.
You’ll also save yourself the time of straightening them up and cleaning them out periodically.
Maybe that gym membership never gets used. Save the money and look for ways to exercise that you actually enjoy. Maybe take a walk outside or invest in some equipment for your home, something you’ll actually use.
7. Escrow
If you have a mortgage, see if your bank offers escrow.
Escrow is a holding account at your mortgage lending institution. They collect a portion of your annual taxes and insurance each month along with your mortgage payment and place them in this special holding account.
Then when those bills come due, they pay them from this account on your behalf, making your life easier. You don’t have to come up with the funds all at once, you’re paying a portion each month.
You also don’t have to remember to pay the bills, your lender handles that for you making sure they’re paid on time and you avoid any fees or penalties as well as liens on your property.
The time is NOW!
When should you start doing these things? Yesterday! The sooner you start, the sooner you can start enjoying your life.
In an ideal world, there’s an abundance of cash in your bank account, your home is perfectly furnished, you have a job you love, and live a stress-free life. But there is no such thing as an ideal world. So we have to learn to live happily with what we have.
And remember KISS – Keep it simple silly.
If you’re looking for a good book, Dave Ramsey’s Total Money Makeover got me started on our way to becoming debt free and eventually working for ourselves!
Check out these other posts you might enjoy!
These are great tips! One of my quarterly goals this quarter is to get back on track with my budgeting. I use YNAB which is super helpful, but I’ve not been in there for about 3 months 🤦🏻♀️
I love love love the idea of separating out the accounts. I’m going to talk to my DH about this and see what he thinks.
Thanks Therese! It’s never too late to get back on track and simplify your finances.