Today, I’m excited to share a post from a contributing author all about simplifying your finances. Managing household finances is something that causes a lot of stress for many people. It’s easy to feel lost, overwhelmed or unsure about what to do to get your finances in order and under control.
The tips in this post are great ways to start better understanding your financial situation. And give you steps you can take to simplify your finances and reduce some of the stress you may feel around managing your money.
With that said, keep reading for 6 tips for simplifying your finances!
6 Tips for Simplifying Your Finances
Finances often feel like a daunting and confusing aspect of life. With all the different payments and investing, it can be overwhelming if you don’t slow down and organize things.
Taking stock of your current finances, using apps, and knowing when simple might actually be better all can help you streamline your money management.
Here are a few helpful tips for simplifying your finances and ensuring you’re setting yourself up for financial success.
Setting up automatic payments on all of your bills – credit cards, insurance, mortgages – can help save you a significant amount of time and stress every single month.
With automatic payments, you never miss a bill and you can typically choose how much you want to pay. While it’s always recommended to pay the full balance, it can be customized for your current situation in case that’s not currently achievable.
If certain businesses or sites don’t offer automatic payments themselves, sometimes you can set up payments through your bank directly. This can be done through your bank’s website or mobile app. Helping combat any sites that don’t happen to offer automatic payment plans.
This can greatly help you with your money management skills as you don’t have to worry about remembering each individual payment. And you always know exactly how much you’ll be paying when it comes time for the bill.
While having multiple credit cards isn’t a bad thing, and in some cases can actually benefit you financially, it’s important not to get carried away with having too many.
It’s sometimes recommended to narrow it down to one credit card per rewards category. For example, having one for cash back, one for travel miles, and so on.
When you apply for a credit card, companies do what’s called a “hard inquiry”. Simply meaning they take a deep dive into your credit history. While a few hard inquiries are fine, if you have multiple in a short period of time, it can negatively impact your credit score.
Cancelling a credit card can sometimes negatively affect your credit score as well. So it’s best to store away the ones you no longer intend to use instead of going through the cancellation process. Plus, having multiple lines of credit can make you more trustworthy in the eyes of lenders.
When it comes to your finances, it’s important to know what takes the top priority.
While some of it may differ from person to person, there are some general rules of thumb that everyone should follow. For the most part, deal with any high-interest debt first. As not only will these start growing in size. But having too many aspects of debt on your financial record is frowned upon.
There’re a few schools of thought on paying down debt. Some people like to start with their largest debt while others tend to organize by the highest interest rate. Both can be correct from certain points of view. So figure out which method works best for you and your current financial situation.
Prioritizing any savings that you might currently have is also important. You may have many things you want to do with your money, but it’s important to figure out which is most important to you.
Are you looking to buy a home? Figure out how much house you can afford, and then prioritize saving toward that goal. The same goes for buying a new car, or even something a little bit smaller such as a new TV or putting it towards a shorter vacation.
It’s also important to remember to prioritize your retirement no matter your age currently. Many people make the mistake of not saving early enough and run into issues down the road.
If your employer offers a 401(k) plan, take advantage of it. Many even offer a match, which you should always do your best to hit. You can often set it up so the savings will come directly out of your paycheck. Making it simple and easy.
Budgeting apps can also be a great solution for simplifying your finances if you want to have all your financial information in one place.
There are several popular budgeting apps, which have a bunch of helpful features in order for you to keep track of your money going in and coming out. They also offer more visual features such as graphs and charts which can be helpful for people who work better by seeing more things than simply numbers on a screen.
Through many of these apps, you can have all your information from multiple financial accounts funnelled into one place. You can also track your spending habits, set monthly budgets, and track your progress to different financial goals.
While this may not work for everyone, more and more people are relying on budgeting or financial apps to help them keep track of their money. You might have to try more than one to find the best fit for you. But they can greatly help streamline your finances.
One of the most common ways people can get bogged down by their finances is having to sort through the mountain of papers that come seemingly every single day.
One of the best ways to avoid the constant stream of bills and statements is to opt into a paperless experience instead. While going paperless may set some people on edge, for the majority of people it’ll make their financial lives much simpler.
You no longer need to keep track of dozens of different bills and pieces of paper, you don’t have to worry about filing statements in the correct place every single time, and you can use search features to find the right thing you’re looking for instead of rifling through a stack of paper.
Depending on your commitment level, you can often download any of the paperless information you receive, and from there you can organize it into files on your computer. This also makes it easier should you need to send information to others, such as lawyers or financial advisors.
Investing can often feel like a very daunting task with seemingly endless choices and decisions to make. Unless you consider yourself to be particularly in tune with the market, most of the time it’s actually better to keep your decisions as simple as you can.
Instead of looking at individual stocks, try and find a handful of index funds or mutual funds. That way, you still get the benefit of multiple stocks without the tedious picking process.
Index funds are simple groups of stocks based on the most popular companies, mostly top 500 or lower. Mutual funds are actively managed by people in order to choose what they think are the best stocks at any given time.
There are pros and cons to both. But overall both will help you simplify your finances and ensure you’re diversifying your investments.
Simplifying Your Finances
Simplifying your finances can greatly help you keep a handle on your money. And help you know exactly what financial situation you’re in at any given time.
Automating what you can removes any stress or anxiety about making consistent payments. And going paperless can help you declutter your mail.
It’s important to find the simple tips that work the best for you, and implement those into your financial life. Managing your money doesn’t have to be stressful or daunting. If you streamline your finances and make your money work for you, you can rest easy knowing that you have prepared yourself for the future.