One of the most critical aspects of your life to simplify is your finances. Taking control of the money that comes in and goes out of your household is imperative.
Many people (me included) believe that their lack of money contributes to their complicated and overwhelming lives, but what if you’re just not keeping your money organized so that it works as hard as it can for you?
Let’s go over ways that you can take control of your finances to make your life simpler.
*This post contains affiliate links to products. I may receive commission for purchases through these links.*
Define Your Financial Values and Establish Goals
Knowing what is important to you about money can help you make the best goals. It doesn’t matter how lofty your goals seem right now; having those goals and then developing a plan to get there is what’s going to make it simple.
Assess Where You Are
Once again, you have to make a mess before you can streamline and simplify.
Go through your entire financial life and find out where you are. What are your debts, what are your expenses, what is coming in, and what do you have saved? You have to include everything in this, down to what you spend at the convenience stores to what you make from side hustles.
Don’t judge yourself when you go through this; just get it all down in writing. Having it all in writing is going to make sorting through it and simplifying it much easier.
Keep Fewer Accounts
Now that you know what you have, notice if you have several checking and saving accounts. There are few reasons to have a lot of accounts unless you need to spread the money around due to banking insurance and most of us won't have that issue.
Most of us can get by with one checking account and one savings account. The exception is if you have your own business, because then you need a separate account for business.
I have a personal checking and savings, as well as a business checking account. I also have the ability to make ‘sub' accounts in my savings for special things like saving up for a vacation or a new gadget.
Fewer accounts mean less time maintaining them and less opportunism for criminals.
Many offices are proud of being paperless today, and you can do that at home too. Set up all your bills for paperless billing, which means they’ll go to your email inbox.
The other option is that if your bank has bill paying options, they often also have e-bill options that you can easily set up with a few clicks online. I covered this a bit more here.
Drop the Credit Cards
If you have more than one credit card, put all but one of them on ice. Use the card with no fee and the lowest interest rates and pay it off each time you get the bill.
Or use the card with the most points for travel so you can get free travel just for paying bills. The point is pick one and use only that one.
*Do not cancel any credit cards, though. This actually is a negative mark on your credit score and you definitely don't want that. If, in going through your cards, you decide you're not going to use one ever again, just shred it and keep the account open.
Pay Off Your Consumer Debt
If you are currently carrying consumer debt balances on revolving credit accounts, find a way to pay them off quickly. If you can consolidate them onto one card while paying it off, that will make things a lot easier.
In going through this part, make sure to print out your yearly, free credit report from each of the three agencies (TransUnion, Equifax and Experian) to check for outstanding accounts you may have forgotten about. This has happened to more than one person, including me. Being blindsided by a debt you thought was taken care of or forgot about is very stressful.
Also, many financial institutions offer credit monitoring with your accounts. Check into this and use it as another way to monitor your report.
Invest in Funds Over Individual Stocks
It takes a lot of time and research to invest in individual stocks. You can instead save time and make it simple by investing in funds.
For example, they might be called something like “the 2045 fund” if that is about the time you expect to retire. The fund automatically adjusts its stock ratio based on the year of the fund to help you avoid risk.
There are a few apps that offer you fee free options for investing, also. So, check into them. They offer both fund and individual stock investment choices. Some even offer ways for you to learn about investing and stocks on their sites. The apps I choose to use are: Robinhood, Stash and WeBull.
Use Cash More Often
Instead of using cards to pay for stuff when you go out, use cash. Cash helps stick to a budget; plus you don’t have to worry about balancing your account, card number theft, or receipts.
I like to go to the casinos once in a while. I purposely take a set amount of cash with me for gambling, then leave ALL of the rest and my cards home so I'm not tempted to spend more than that.
Let Go of Services You Don’t Need
Look at any automatic payments coming out of your accounts. Think about whether you really need them or not.
Do you use them enough to justify the cost?
Are you using them as you thought you would?
When is the last time you used it?
Is there a less expensive option?
For example, you may be surprised to find out that now that Game of Thrones is over, you never use your HBO GO subscription. Those few bucks can add up.
Know How to Make Goals
Learn the right process for goal making when it comes to money. Goals need to be SMART, which means that they should be specific, measurable, attainable, realistic, and time-based.
Also, write down your goals and set up steps to reach the goal that you put into your calendar.
For instance: One of my goals is to make $500 by 2/28 through my side businesses. This fits the SMART goal setting.
Know If Renting or Owning Is Right for You
It might shock you to know that home ownership really isn’t financially best for everyone.
For some people, renting is a lot better. This is especially true if you’re not sure where you want to live for the next five to ten years. Or, if you are already planning to move to a different area.
You can simplify your life by renting too, because you won’t be responsible for unexpected repairs like a water heater or furnace replacement.
Add Passive Streams of Income
Studies show that most rich people have multiple streams of income. Even if you don’t care about the word “rich,” the fact is that adding a passive income stream can really help you with your financial life.
There are many ways to earn passive income today, from rental investments to selling digital and affiliate products online.
I sell digital, physical and affiliate products online and locally. These are my passive streams of income. If you're interested in selling digital products online, this course is a great start!
Stop Learning and Start Implementing
If you’ve read a lot about finances in the past but have yet to do any of the things you’ve learned, take this advice and run with it.
Implement something. Pick one thing and just go for it.
When you have success on that, you’re going to want to do the next thing.
Learn the 50/30/20 Budgeting Model
If you don’t have any experience creating budgets yet and tend to live by the seat of your pants, check out this budget model for your personal finances.
It’s an excellent way to start out because it will ensure that you always really have enough. Here is a 50/30/20 spreadsheet you can use: https://www.tillerhq.com/snapshot-spreadsheet-spend-and-save
Time to take control
Taking control of your finances is less about doing without, and more about doing more with what you have. The truth is, money problems are often just a lack of attention to the topic.
If you tend to buy coffee at the shop daily, go out to dinner without a plan, and have no idea how much you owe or earn, it’s going to be much harder to simplify your life.
But when you know what you have, what’s coming in, what’s going out, and why and how, it’s going to make everything that much simpler to manage.