Are you looking for ways to simplify your financial life? Here are 8 Tips To Help You Simplify Your Financial Life
8 Tips To Help You Simplify Your Financial Life
Follow these 8 steps to simplify your finances and make life easier
With how much we all have to worry about on an everyday basis, it’s no wonder that so many people feel overwhelmed by their finances. From remembering to pay your bills on time to working toward long-term financial goals, it’s a lot to keep up with! Add parenting to the mix, and you have a lot of responsibility to worry about.
Managing finances doesn’t have to be as complicated as we make it. By taking some steps to simplify your financial life, you will find managing finances can actually be pretty simple.
The Top 8 Tips To Help Simplify Your Finances
1. Use a budgeting app
Simply put, everyone needs a budget. How you choose to make your budget is entirely up to you. You may choose to lay it out on paper or maybe even through a spreadsheet. To make your budget as simple as possible, you should consider using a budgeting app.
On most budgeting websites and apps, you can connect all of your account information in one place. This gives you a high-level overview of all of your income and expenses. This can make it so much easier to keep an eye on all of your accounts and track your spending.
Many apps or websites can automatically categorize your spending, too. This way, expense tracking can be a much less manual process. Overall, the right budgeting app for you will help you become much more aware of your spending habits and take some of the manual work out of budgeting.
2. Get electronic billing statements
Simplification in your financial life can consist of decluttering your physical life, too. Paper billing statements clutter your life if you aren’t properly organized. Some companies even charge to send you a paper billing statement now, so if you don’t really need paper bills, it’s time to go paperless.
Most companies have some sort of option to go paperless. Most commonly, you can log into your account and update your billing preferences in your account settings. All you have to do is update your email address and voila! You’ll start getting paperless billing statements as soon as your next billing cycle occurs. If the company doesn’t have a paperless billing option online, just contact their customer support department to see if there’s anything they can do internally.
You can still keep your billing statements organized and easily accessible whenever you need them. Here are a couple of ways you can organize your paperless billing statements:
- Create folders in your email and move your billing statements to their respective folder each month.
- Download the PDFs and save them to your personal drive. Organize your files in folders as you see fit.
No matter how you find it best to organize your documents, make sure you find a system that works for you.
3. Automate what you can
Just like paperless billing, most of the companies you do business with offer some type of automatic payment option. Paying your bills becomes much easier with automatic payments set up.
To automate your billing, you have a couple of options:
- Set up payments through your servicer – Enter your bank account info and your payments will be automatically deducted from your account.
- Set up automatic payments through your bank – Enter the billing information for your servicer to your bank and your bank will send an automatic payment on your behalf. This option works better if you don’t feel comfortable giving your bank account information to your servicer.
Be sure to check your billing statements regularly to make sure you aren’t being overcharged for anything.
4. Close accounts you no longer need
You may have opened up a few different accounts that you may have needed at one point or another but you don’t need now. Take inventory of all of your financial accounts including:
- Bank accounts,
- Savings accounts,
- Financial apps,
- And any other financial-related accounts.
Sit down and determine whether or not you actually need those accounts. If the account no longer serves you, close it out. That’s already one less account you need to worry about!
This piece of advice does not apply in the same way to credit card accounts. Part of your credit score is determined by the age of your accounts and your credit usage. Closing out credit cards that are older or carry a high credit limit could ultimately damage your credit.
5. Understand your financial needs vs. your wants
Your financial needs and your financial wants are obviously very different.
Your needs are the essentials that you have to have to work and live—and these likely make up a large portion of your monthly expenses.
Your wants, on the other hand, are what help you live a little bit more comfortably. When you simplify your finances, you should take a look at both your wants and your needs to see where you can cut back.
There’s no reason to cut back on all of your wants. You still need to live comfortably in your life, so don’t cut out all of your travel plans, your nights out, or whatever else you classify as a want. Just ensure your needs are taken care of first, and you approach your wants with a moderation mindset.
As far as your needs go, it’s definitely possible to overcomplicate these too. Needs vary from person to person, but let’s take a look at some of the most common financial needs you may have and how you can simplify them:
It’s estimated that no more than 30% of your income should be spent on housing expenses. That’s a big part of your budget! If you find that your housing costs are eating a bit more than this standard 30%, you may need to make some adjustments.
If you have a mortgage consider these tips:
- Refinance your mortgage – Refinancing your mortgage or even switching mortgage types can potentially lower your interest rates.
- Downsize – If you find that you have too much space, consider downsizing if you can.
If you rent, consider these tips:
- Shop around – Look into different neighborhoods and areas to see if you can find an apartment for less.
- Negotiate your rent – If you have a strong renting history, you can always ask your landlord to lower your rent. They may find a lower cost is worth it to keep a good tenant.
When it comes to transportation, no more than about 10-15% of your budget should be spent on these costs. With a car, insurance, and maintenance, it can be a lot to keep up with transportation costs. Here are some tips to help you simplify your transportation budget:
- Use public transportation – Public transportation is often a much more affordable way to get around. If you have access to reliable public transportation, try taking it from time to time. It’s also more environmentally friendly, too!
- Carpool – See if you can work with any other parents to split carpooling responsibilities to and from your kids’ normal activities.
- Don’t skip out on regular maintenance – Regular maintenance on your car is the best way to make sure that your car is in good condition for longer. Skipping out on maintenance could leave you with an even bigger headache down the road.
Gas, water, heat, electricity, trash, internet, cable—those are a lot of things to remember to pay on a monthly basis! If you don’t pay attention to your utility usage, you may end up paying a lot more than you need. Let’s take a look at some ways to simplify your utilities:
- Cut down on your usage – Simple habit changes, like turning off the lights when you leave a room and taking shorter showers, can significantly reduce your monthly utility bills.
- Switch to energy-efficient appliances – Even making the switch to LED lighting can help you save a little bit of money on your utilities.
- Compare prices – For things like internet access or your phone, try shopping around to see if you can get a lower price for the same or similar services.
It’s no question that going out to eat more than you stay in will completely wreck your budget. With a little bit of effort, you can make eating at home much easier:
- Use coupons and utilize store sales – If you’re trying to cut back on grocery store costs, consider planning your meals around grocery store deals and other coupons you may find.
- Make a list – Without a list, you may go rogue in the grocery store. You may leave with more than you need, or on the other hand, you may not get all the things you need to cook a lunch. Make a list and stick to it.
Most people would agree that emergency financial planning is a need, but many don’t prioritize it as such. When it comes to your financial needs, an emergency savings account and life insurance should be considered essential.
Your emergency fund should consist of anywhere between 3-6 months’ worth of your family’s typical monthly expenses. You should have this set aside so that if you and your family ever have to miss a paycheck, you have the money you need to keep up with your normal monthly bills.
The easiest way to simplify your emergency fund is to first set up a savings account that is going to get you the most return from your fund. The goal is that you don’t want to touch this money until absolutely necessary, so these funds may sit in your account for a bit of time.
Set up automatic withdrawals from your checking account to this savings account so you can bulk up your funds without even thinking about it. Once you have enough saved up for your comfort level, you can turn off those automatic deposits to your account.
As far as life insurance goes, this is even more so overlooked as a financial need. But, if you or your spouse were to pass away, a life insurance policy could provide your surviving family members with some financial protection.
The simplest way to get a life insurance policy is by finding a type of accelerated, no-medical exam life insurance policy online. Traditionally, getting a policy would require you to fill out a lengthy application, undergo a medical exam, and then go through the medical underwriting process. While this traditional process can take weeks, an accelerated life insurance policy with no required medical exam may only take a matter of minutes. These types of policies typically run at a similar rate as a traditional policy, so you won’t have to worry about paying too much extra out of convenience.
With an active life insurance policy in place, you can see if your life insurance provider will allow you to make payments either annually or semi-annually. This article touches upon the benefits of this approach below, but essentially this may lower your costs while simplifying your payment schedule.
6. Review your credit report annually
Many companies offer to give you an update on your credit score on a pretty frequent basis. Looking over your credit score on apps or other websites is a great way to keep your credit in check, but you should take the time every year to do a thorough review of your credit report.
This helps you see any progress you’ve made on your credit, notice issues that may need your immediate attention, or flag errors that could bring your credit score down.
You should request a credit report from each of the top 3 credit bureaus that track your credit history. All of the credit bureaus will send you one free credit report per year. Your credit report from each credit bureau may look a little bit different, but the core of your report should be just about the same.
Make sure that all of your personal identifying information is correct. Run through your credit history report to ensure that all of your accounts and payments have been reported correctly. Should you find any errors, report these to the credit bureau reporting the error. It can take a bit of time to get errors disputed, so it’s best to work on getting those taken care of as soon as possible.
7. Pay expenses annually or semi-annually when possible
Some bills, especially fixed expenses, can be paid once a year or even twice a year. This is offered as an option most commonly for insurance, but some of your other providers may give you the option to pay annually or semi-annually as well.
While it definitely is more of an upfront cost when you pay this way, most providers will give you a certain discount for paying your bill in bulk. Plus, on a month-to-month basis, you will have fewer bills you need to worry about paying.
8. Simplify your financial goals
Goals help you keep a clear mindset when it comes to your finances. If you already have some financial goals in place, you’re already off to a great start!
With that being said, while it’s great to have goals, it’s not so great to have too many goals that you can’t focus on any of them. That’s why it’s best to simplify your goals to try to focus on 2-3 smaller goals at a time.
Some goals, like retirement planning, will take you years to accomplish. It’s good to have these types of goals on the back burner, but they may not be the best goals for you to focus on all the time. Other goals, like paying down a credit card or saving up for a downpayment on a house, are a bit smaller and more achievable. Find a balance between your longer-term and shorter-term goals and focus on simplifying them to help yourself stay on track.
With a busy life and a lot of responsibilities, it’s natural for you to feel overwhelmed by finances. After all, it’s just another thing on your plate you need to worry about. Hopefully, by following these tips, though, you can start working towards a simplified financial life.