Interested in simplifying your financial life? You’re not alone. After all, most people’s finances are too complicated. As a result, other parts of their lives get affected. Procrastination and stress are the results of a messy financial life. Your financial security, independence, and peace of mind can increase when you simplify your finances. To spend more time and energy on what truly matters in life, here are 24 tips for simplifying your financial life.
1. Make the switch to paperless billing.
Like frosted tips and Beanie Babies, paper bills should be relegated to the 1990s.
By going paperless with your bills, you can reduce clutter around the house — and even save some trees. All the companies that you do business with make it easy for you to opt for electronic billing. This includes banks, credit card companies, cable and streaming TV providers, cellphone companies, and insurance companies. They sometimes offer bonuses, gift certificates, sweepstakes prizes, and other incentives to customers who opt for paperless billing to save money on stationery and postage.
On the other hand, some companies charge you for paper statements. If you receive bills via snail mail, you could be paying between $2 and $10 for the unnecessary privilege.
If you would like to opt out of receiving paper statements, you can log into your online account and go to the settings menu. Instead of receiving paper bills, enter an email address where you’d like to receive e-bills. That’s all it takes, and if you ever need a hard copy, just print it out.
2. Automate your bills.
When possible, set up auto payments to simplify your finances. All your monthly bills, from credit cards to utilities to insurance to loans, mortgages, and even rent, can be put on autopilot.
With automated payments, late fees and late payments won’t be an issue. Late fees typically range between $25 and $50. In addition to increasing account balances, late fees can negatively affect consumers’ credit scores as well.
You can often set up automatic payments for your bills by adding your bank account information on the website of the service provider.
If a business doesn’t offer automatic payments, you can arrange recurring payments from your checking account via your bank’s website or mobile app.
3. Consider consolidating bank and retirement accounts
Having one checking account and one savings account is sufficient for most people. It is a good idea to consolidate your various accounts into one checking account and one savings account if you have more. After all, do you really need 2 savings, 3 checking, and 4 separate retirement accounts? Your banking will be simplified without sacrificing service levels.
Similarly, retirement accounts are subject to the same rules. You may have several 401(k) plans from previous jobs. You should understand what makes sense for your situation; one option is to roll them over into a self-directed IRA account. Besides reducing paperwork, this could also help minimize account fees, and make managing your retirement assets more convenient.
4. Create a 50/30/20 budget.
The purpose of a budget is to show how you can spend your money from month to month. Creating a budget will help you keep your finances in check. You can also save money with a budget for your goals or emergency expenses.
Thankfully, you don’t have to create an overly complicated budget. Case in point, the 50/30/20 budget.
This simple budget rule is a great place to start for those just beginning to learn how to budget. The plan appeals to everyone who wants to pay their current bills, pay down debt, and start saving for the future at the same time.
Simply divide your income into these categories:
- 50% is spent on necessities
- 30% for wants
- 20% goes to debt repayment and savings
Another benefit? It’s flexible enough to allow you to use different variations to meet your specific needs. The 80/20 rule, for instance, can be tweaked for a stripped-down version. 80% of your income goes toward essentials and luxuries, while 20% is saved.
5. Redefine “enough.”
Do you have everything you need or want? Does your life have “enough”? As a society, we are taught to believe that we deserve more because we are socially persuaded that we need it. In order to keep a possession current, relevant, and functional, you need to upgrade or update it regularly.
It’s assumed that the more you spend, the more comfortable you are. But are you really comfortable? Is it enough for you?
You can keep yourself sane by defining enough for yourself on a financial, physical, psychological, and moral level. Forget what everyone else thinks is “enough.”
Repeat after me. You are enough.
6. Bundle your insurance.
A single insurance company can provide you with both home and auto insurance, which can save you time and money.
Customers can save an average of 15% when bundling home and auto insurance policies. There is usually a split between the two policies when it comes to the overall discount.
Bundling two or more policies can result in a bigger discount. Insurers may partner with one another to offer bundled discounts and coverage they don’t underwrite. It’s important to keep in mind that bundling doesn’t always result in savings, so you should look for policies separately as well as bundled.
7. Maintain a one-in-one-out policy.
When you follow this policy, you will be able to control your spending, borrow (if possible) before you buy, and put an emphasis on experiences rather than possessions.
If you want to control your consumption habits, donate your old jacket if you purchase a new one. Try borrowing an occasional or seasonal tool instead of buying it if you need a new one.
8. Knock down debt.
Eliminating high-interest debt is one of the best ways to reduce financial stress.
If you pay off even one large credit card or loan, it can ease your worries, as well as reduce your monthly financial obligations. Furthermore, you can use the money you would otherwise spend on debt to pay off additional debt or take that dream vacation.
Paying off debt can be accomplished by using a debt snowball or debt avalanche strategy.
By using the debt snowball method, you list your debts by size and then pay the minimum on any debt with the smallest balance while paying extra on the rest. You start with the smallest debt, then move on to the next. Your life can become simpler, and you may feel accomplished if you are able to pay off your debts in full.
In the debt avalanche method, you prioritize debts by interest rate, then pay extra money for the debt with the highest interest rate first, after which you pay the minimum on the remaining debts. As soon as that debt is paid off, you put extra money toward the next-highest debt. Using this method may take more time, but over time you will pay less interest on your loans.
9. Reduce your credit card usage to just one.
Credit cards are one of the best ways to earn rewards and take advantage of zero-interest rate promotions.
Focus on one credit card for maintaining a good credit score. Choose the one that offers the most benefits. Put any other cards away but keep the accounts open for your credit history. Using a single credit card makes managing spending and payments much easier than five or ten.
10. Expenses should be paid annually or semiannually.
While some bills are recurring, you can eliminate some by paying them annually or semiannually.
Paying bills such as car and homeowner’s insurance every six months or once a year is an option.
With just two bills, you will have two fewer monthly payments to worry about.
You’ll probably need to adjust your monthly and annual budgets to accomplish this. Even so, it’s always a good idea to review and adjust your budget.
Additionally, if you pay in advance for your home and car insurance, you may receive a discount. Most insurance companies offer discounts that range from 6% to 14% if you pay in full instead of breaking your bill up into monthly payments. By spreading out your payments, you will also avoid paying a monthly finance or service fee that some companies charge.
11. You can reclaim your time by unplugging.
As you know, getting rid of cable and your landline will save you money. In response, a growing number of people are streaming TV shows directly from television networks online and subscribing to more affordable services like Hulu or Netflix.
When you watch only a few shows anyway, or want to cut down on TV time, this is the way to go. In addition, landlines are becoming increasingly irrelevant as people use their smartphones to communicate and entertain themselves.
Consider this question: Which services aren’t necessary? By cutting the cord, you’ll be able to reclaim your time, while saving some money.
12. Hide your emergency fund.
Savings and checking accounts are typically held at the same bank. This may work for rotating savings goals like that expensive smartphone you’ve been eyeing or your vacation. However, it won’t help your emergency fund.
Emergency funds should not be easily accessible. Whenever you log into your online banking, you don’t want to see that large sum tempting you to use it “just once” for a non-emergency.
Don’t put it at your bank; put it elsewhere. An online bank or taxable brokerage account may offer money market accounts or high-interest savings accounts. In an ideal world, it would earn maximum interest while being available whenever needed.
Despite the rule that you should consolidate your accounts, your emergency fund is the exception. Don’t forget it, but keep it out of sight and mind.
13. Put your savings on autopilot.
Saving money can be highly effective when you set it and forget it. It’s convenient because you never have to remember to transfer money from your checking account to your savings account. In addition, you won’t have a chance to spend the money before it disappears from your checking account.
Setting up a recurring transfer from your checking account to your savings account each month — perhaps the day after your paycheck clears — is the easiest way to automate savings in just a few minutes.
It can be worth automating this task even if you are only able to handle a small amount each month. Regardless of what happens, your savings will accumulate over time since you will save every month.
14. Don’t spend money you don’t have.
This might sound harsh. Buying now, paying later (BNPL) and 12-month financing are scams. BNPL can lead to overspending on items people could not afford otherwise if they had to pay upfront.
For some people, this can lead to excessive debt. Close to a third of BNPL users had difficulty making payments, resulting in them skipping a bill to avoid defaulting on their plans, according to the Consumer Financial Protection Bureau (CFPB). One in four Americans (22%) who use BNPL regrets their decision immediately and wishes they hadn’t signed up, as a result.
What’s the best way to get something you can’t afford right now? Save.
As you save and wait, you can research all your purchasing options and find the best deal. As a result, you either discover a better alternative or realize that you don’t actually need the item.
15. Go used.
Don’t be afraid to buy used cars. New, fancy cars are often associated with prosperity, so this is a tough one for many people. Getting rid of your car as an object of status is a very liberating experience.
In addition to the money you’ll save on monthly payments, you’ll also save money on the cost of premium gas, repair and maintenance parts, and insurance premiums.
16. Streamline lifestyle practices.
What is the origin of your food? Are you reusing and repurposing items, or do you toss them out?
Life should be made easier by convenience. The result is that you end up wasting money and damaging the environment as well as your own health by replacing products frequently. Get back to life basics by growing some of your own food and making your own cleaning products, for instance. In the end, you’ll be able to provide for your family in a way that’s rewarding and fulfilling, and it won’t take you much time.
17. Spend only with cash or debit cards.
Whether you’re looking for cash back or travel rewards, credit cards have tons of perks to offer. At the same time, credit cards provide plenty of temptation to overspend. According to USA Today, over 60% of credit card holders experience this issue. As a result, these cardholders are unable to pay off their credit card debt on time with their normal income, which leads to interest charges and increasing balances.
Putting your credit cards away in a drawer and spending only the money you have is the best way to pay off your credit card debt each month. For spending and budgeting, you could use the envelope system. Alternatively, you could set up a checking account for discretionary spending and use your debit card only.
18. Set fewer goals.
Having financial goals can be a great thing. Most of us plan to buy a home, pay for our children’s college, and retire. When you set too many goals at once, you can lose focus, and you won’t make any progress.
Focusing on just a few objectives at a time can be more effective. In order to achieve your retirement goals, you should start saving early. The sooner you start saving, the easier it will be.
Saving for a down payment on a house, paying off your credit card debt, or putting money aside to help pay for your children’s college may also be goals.
Your best chance of making progress may come from focusing your attention on just one or two specific goals. Best of all? After you achieve your first goal, you’ll likely be inspired to set and accomplish new ones.
19. Focus on what brings in the most income.
Multiple streams of income sound great in theory. But pursuing too many income streams can complicate matters. Having one primary and one secondary source at the same time is the best strategy.
As an example, let’s say you work a demanding full-time job, run a blog, dabble with freelancing, and drive for Lyft on the weekends. Decide which of these side hustles best fits your lifestyle, and focus on it. It is likely that you will achieve more success if you simplify your financial life.
20. Reduce the number of subscriptions.
There’s no denying the popularity of subscription boxes right now. The monthly subscription is like receiving a present every month, and who doesn’t like receiving gifts?
But here’s the catch. This is an impulse purchase disguised as a box. Most people don’t return the items, so they make it easy for you to do so.
Keeping something you don’t need is easier than sending it back. So, while it may seem like a small amount, that $12 here and $25 there quickly adds up to an entire closet full of stuff we don’t need.
Don’t stop there, though. If you rarely use any subscription or service, cancel it. This could be a streaming service you never watch or that gym membership you never use. By removing them, you’ll simplify your life and save money. And it is easier to manage your finances if you have fewer payments to make.
21. Don’t go big, go small.
Relocate or downsize if housing expenses are causing financial stress for you. After all, it might be possible to improve your financial situation by taking a similar job in a less expensive area. In general, if your total housing expenses, including rent or mortgage, insurance, taxes, maintenance, and utilities, exceed 40 percent of your income, then you may be in financial hardship.
Also, it’s easy to overbuy a house with credit if we leverage it to purchase a home. Buying a larger home means paying a higher mortgage, insurance, utility, and maintenance costs. Moreover, you’ll have to fill it with more junk.
Take a look at a smaller vehicle as another example.
Even though this is a big move, you may not need something that big if you own a large car or SUV. Besides being more expensive, it uses more gas, is harder to maintain, and is more difficult to park.
If you have a family, you don’t need to go tiny. But try to find the smallest car that your family can comfortably fit in.
22. Start a fitness plan.
This doesn’t mean you must join a gym. Find a fitness activity you enjoy and can be consistent with. Exercise builds up over time. So, each step you take, every walk you take, every sit-up you do contributes to your overall well-being.
Furthermore, physical health contributes to financial health. With a clearer, more mindful outlook, you’ll make better decisions, stay healthier (with fewer medical bills), and make better decisions.
23. Pay someone else.
Making money sometimes requires spending money. You can save a lot of money in the long run by hiring a professional in a few areas of life. In the case of real estate or a side business, or if you have a lot of assets, a good accountant is invaluable. A financial professional can help you to identify priorities and build a plan to work towards achieving your financial goals. You don’t have to do it all on your own.
24. Say no sometimes.
Whenever someone asks you to do something that is not in line with your values, priorities, or time constraints, say no! Ultimately, it’s up to you how you spend your time and money.
However, if you say no to something, it doesn’t necessarily mean it’s for life. It could simply mean ‘not today.’ Keep in mind that every time you say ‘yes’ to one thing, you’re also saying ‘no’ to another. Think about what’s most important to you at the moment.
Some questions to consider:
Why simplify your financial life?
Being intentional with your money begins with decluttering and simplifying. You should also be more mindful of what you consume.
When you declutter and simplify your home, you’re likely to be motivated to buy fewer items. This will help you maintain a clutter-free home.
You can also keep track of what you have and find things more easily when you clear the clutter. If you avoid buying duplicate items or replacing things you cannot locate, you will save money.
As you simplify, you can spend your money more wisely. It also reduces financial stress by giving you a greater sense of control over your finances.
What are the benefits of clear financial life goals?
Oftentimes, people feel rudderless when their financial life goals are unclear, which leads to feelings of insecurity, anxiety, and scattered thinking, especially when planning for retirement.
Changing your mind through goal setting is proven to change your brain. Furthermore, when highly motivated to achieve something, you begin to perceive obstacles as less important. The science also suggests you’re more likely to succeed if you keep regular track of your progress.
Are you ever done saving?
Simply put, no.
Expenses such as home maintenance, vacations, and special occasions gifts should be easily covered by your savings account from time to time, but not unexpectedly.
As well as regular savings, you need to pay off debt and replace your car’s tires in case of an emergency. Knowing these things will happen at some point, you should be prepared for them in advance.
What is the best way to evolve your financial strategy as your needs change?
There is no guarantee that everything will go according to plan, even with the best planning. It is natural for your life stage, preferences, and needs to change. Your financial plan should change when they do. One moment, you’re getting ready for your children to enter adulthood. Then you’re taking care of your aging parents. As your journey evolves, your financial plan must adapt as well.
GE-5776708.1 (7/23)(Exp.7/25)
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