Are you overwhelmed with managing your finances? Yeah, me too.
Personal Finance and all of its many parts can be exhausting, however by simplifying your finances and stacking our habits we can cut out a few steps making the process simpler.
Here are 16 ways I’ve found to simplify your finances.
1. Automate
First, I’d like to point out that automating can be a good thing, but it can also hinder some people from fully paying attention to their finances. Automating is more helpful than harmful, but I found the disclaimer necessary.
There are three areas that I recommend automating.
First, automate Bills, savings, and investing.
Automating your bills can save you time when budgeting. When most of your bills are scheduled to be taken out, you never have to worry about forgetting if you’ve paid.
Automating your savings means you are paying yourself on auto pilot. Even if it’s small, consistently adding money to a savings account ensures that your future emergency is a mere inconvenience.
Lastly, automating investing prepares you for your future life. Again, small, consistent contributions to your retirement accounts mean a future of security. If you are on the path to Financial Independence, this may mean significant, consistent contributions to your retirement account.
2. Use Cash
Using cash seems old-fashioned, much like using checks, but it has its place. Whenever I wanted to get my spending under control, I went to the bank twice a month to pull out cash. I had five spending categories that I budgeted and used only cash.
I could see every dollar that was used. So, therefore, no miscellaneous money would leave our checking account because what was being used was already pulled out.
This technique isn’t for everyone, but I highly suggest trying cash for 60-90 days to simplify your budgeting. However, while this is simplifying, it may not be convenient.
3. Become Debt Free
Paying off debt is the ultimate simplifier. Nothing complicates your life more than feeling like you owe everyone every dollar you make. That is why it’s essential to start this journey as soon as possible.
It can take time to dig yourself out of debt, but you will lift a considerable weight by creating a plan and consistently executing it.
(Read my debt-free story here.)
4. Stick to one credit card
I enjoy travel hacking like the next person, but I also know I have to be very strategic with how I use the cards. Simplifying means focusing on using one card at a time to gain points, then removing it from my wallet when I’ve exhausted the benefits.
I then refer back to using one card with the best benefits. It’s much easier to manage one card than 4 to 5 at a time.
5. Combine Accounts
Having just a few accounts makes managing money so much easier. Combine checking and savings accounts and roll over retirement accounts into self-managed funds.
Consolidation reduces paperwork, fees, and time spent managing each account.
6. Remove Subscriptions
Keep subscriptions to a minimum. Even more radical thought is to cancel them all once. Go 14-30 days without subscriptions to see which ones you value the most. Then, the ones you haven’t missed, let them go for good.
Sign up for the ones you missed on the same day. They will all come out of your account at similar times, making it easier for you to track changes in fees.
Subscriptions are one of the ways to let money slip through. Therefore, simplify your budget by getting rid of them.
7. Cut back on side hustles.
I am a huge advocate for side hustles; however, too many side hustles can put a strain on you mentally and physically. Cut back your side hustles to one that makes the most sense for you. Or cut them out entirely and focus on making more money in your 9-5.
8. Rent a home instead of buying.
Owning a home can complicate your life immensely. A lot goes into the upkeep of a home mentally and physically, especially financially.
Think of HOA fees, yard and exterior maintenance, insurance, escrow, and interest. While owning a home can be fantastic and fulfilling, it can also come with hardship if you aren’t well prepared. We can’t wait to own a home again but also enjoy renting.
9. Digitize your Paper
Pesky paper. We all know that keeping up with and maintaining paper documents is a pain. So why not digitize it. Invest in some cloud storage and begin the process of digitizing.
Go through and get rid of old papers and docs. Keep handy the few documents that can’t be digitized, i.e., birth certificates, wedding licenses, and social security cards. Then, organize the other documents by category and file them to the cloud.
10. Focus on One Goal at A Time
I can get overzealous with setting goals, especially financial ones. I want to pay off debt, build wealth, create passive income, and fund my kid’s college funds all at once. But, it’s the pull to “get more done” that I am constantly trying to overcome.
I’ve found that creating too many financial plans at once pulls you in many directions. It would be best if you only focused on a couple of things at a time, or you risk the chance of losing momentum on all goals. So focus on one to two goals at a time.
Simplifying your finances starts with taking small steps to set goals and then snowballing them into something great.
11. Complete a No Spend Challenge
One thing about me, I love a good challenge. I recently completed a 100 Day No Spend Challenge that helped me to curb my spending and reset bad habits. I find that a No Spend Challenge simplifies budgeting and tracking your spending. No Spend Challenges can be fun when you participate with a group. Gather a couple of friends and plan your own.
12. Pay In Advance
Pay your bills and subscriptions in advance. Many companies will allow you to pay up your bills 3, 6, and even 12 months in advance. Think cell phone bills, insurance, and subscriptions. This will simplify your bill-paying process.
13. Adequately Fund your Emergency Fund
If you do nothing else on this list, begin to build an adequate Emergency Fund. Three to six months of bare essentials expenses are necessary regardless of the economy or career you are in.
You want to be comfortable that you can make it through three to six months of hardship if something happens. Some people even opt for a year of savings.
14. Simplify your Investments
Choosing and managing stocks is highly complex. Much research is involved, timing, and overall stalking the market. People make a full-time job of it.
So why not simplify your investments by investing in index or mutual funds. This will remove some of the stress of managing single stocks.
15. Track your spending with an App
Tracking your spending is highly important to the success of your financial journey, but many of us are far beyond pencil and paper. While I enjoy manually writing down everything I spend, it can be taxing.
Try financial apps like Mint, YNAB, and EveryDollar to help track your spending and simplify budgeting.
16. Get rid of some assets
I am in the process of selling an old rental property. I am over the maintenance and responsibility of owning a rental. I understand that some people thrive in the area of rentals but that is not the case for our family. Just because the property brings in some rental income doesn’t mean that I am at peace. If you want to simplify your finances, sell some of your larger assets. Cars, rental properties, large motor toys, etc.
What tips or tricks do you use to simplify your finances? Which of the above are you planning to implement. Drop a comment below with your favorites.
