Life is hard enough without your finances adding to your stress.
Too many people spend sleepless nights worrying about their finances or weekend mornings poring over complex financial spreadsheets. Your financial life should be simple enough that you can track your assets and expenses without breaking a sweat.
How to Simplify Your Financial Life
Fortunately, today’s technology makes it easier than ever to streamline and automate your finances. If you’re ready to spend less time keeping your money straight and more time doing what you love, start with these easy changes to go from busy bee to stress-free.
1. Transition to Paperless Billing
Paper bills are so ’90s.
Reduce clutter around your house and save a few trees by going paperless with your bills. Your bank, credit card company, cable TV provider, cellphone company, and insurance company all make it easy for you to opt for electronic bills only. It saves them money on stationery and postage, so they sometimes offer bonuses for opting into paperless billing.
Conversely, some companies charge you if you insist on receiving paper statements in the mail. They slip it in the fine print, and you could be paying anywhere from $2 to $10 for the dubious privilege of receiving bills via snail mail.
Log into your online account, go into the settings menu, and opt out of paper statements. Enter an email where you want to receive e-bills instead. It’s as simple as that, and you can always print a bill if you ever need a hard copy.
2. Automate All Payments
Do you routinely pay your bills at the last minute and get hit with late fees? That can be another source of stress and lead to more work on your part. Instead, stop trying to remember your due dates and schedule recurring payments.
You don’t have to lift a finger once you’ve set them up, and your mortgage, automobile, and credit card payments all arrive on time. Most recurring service providers offer this option, and for those that don’t, you can always schedule recurring payments through your bank’s bill pay service. It even works for companies who only accept checks — your bank can physically print a check for you and mail it to the recipient.
But keep in mind that even though you automate your payments, that doesn’t mean you should stop looking at your bills altogether. It’s all too easy to get complacent and forget you’re paying for a service you no longer use. Automated payments also create a risk of errors. So double-check your accounts each month to make sure the balance drops to $0.
Even if you overpay, you can always call your provider and get the credit back to your account.
3. Close Old Accounts, Including Old Retirement Accounts
Most people don’t need multiple checking, savings, and brokerage accounts. It complicates your financial life and leaves you with unnecessary accounts to juggle, track, and balance.
Consolidate and declutter your finances by closing your old accounts. You may even discover substantial sums lying around collecting dust in these accounts.
It happens often with retirement accounts held through previous employers. In the commotion of changing jobs, many workers forget to roll their 401(k) over to their IRA or Roth IRA. Years go by, and they forget they have thousands of dollars invested in an account with an old employer.
Fewer accounts to track means less to keep track of, fewer logins to remember, and a lower likelihood of forgetting about funds.
4. Put Your Emergency Fund Out of Sight
Most people keep their savings and checking accounts with the same bank. That may work for rotating savings goals like your next vacation or that pricey jacket you’ve been eyeing, but it won’t do your emergency fund any favors.
Emergency funds shouldn’t be easy to access. You don’t want that large sum staring you in the face every time you log into your online banking, tempting you to use it “just this once” for a nonemergency.
Instead, put it at another bank. You could put it in a money market account through your taxable brokerage account, or in a high-interest savings account at an online bank like CIT Bank. Ideally, it should earn maximum interest even while being accessible at a moment’s notice.
Your emergency fund is the exception to the rule of consolidating your accounts. Keep it out of sight and out of mind, but don’t forget it exists.
5. Consider Cash- or Debit-Only Spending
From cash back to travel rewards, credit cards offer plenty of perks. They also offer plenty of temptation to spend more than you can afford. It’s a problem for over 60% of credit card holders, according to USA Today. These cardholders can’t afford to pay off their credit card debt each month with their normal income, resulting in interest charges and increasing balances that become harder to pay off over time.
If you can’t pay off your credit card balance each month, put your credit cards away in a drawer and switch to only spending money you have. That could mean using the classic envelope system for spending and budgeting. Or it could mean setting aside a checking account for discretionary spending and only using your debit card.
When you run out of money, you live with the consequences. You don’t spend a dime until your next paycheck.
It’s a great way to force yourself into good spending habits with built-in accountability. Because once you dig yourself into debt, clawing your way out of it again proves no easy feat.
6. Prioritize Paying Off Debts
Not only do debts complicate your finances, but they also sap your fiscal strength. You might earn a healthy 10% return on your investments, but if you’re paying 20% interest on your credit card debt, you’re in serious trouble mathematically.
Debt also weighs on you in less tangible ways. When faced with tens of thousands of dollars in credit card debt, most people don’t think strategically about creating wealth, investing money, or building a portfolio of income-producing assets. All they see is the debt and their desire to be rid of it.
In other words, debt pressures people to think defensively about money, rather than offensively with ambitious long-term goals.
Aim to rid yourself of unsecured, high-interest debt as quickly as possible. Try the debt snowball or debt avalanche techniques to knock out your debts in fast succession and build on your momentum.
The more money you can save each month to put toward those debts, the faster you can pay them off and start building real wealth.
7. Automate Your Savings
If you earn $1,000,000 per year and spend all $1,000,000 of it, you’re not rich. You’re broke.
Wealth comes from your savings rate. The greater the percentage of your income that you save and invest, the faster you grow your net worth.
Where most people run into trouble is they pay themselves last, saving whatever money they have left over at the end of the month. It makes their savings their lowest priority and the last “expense” they pay each month.
That’s precisely why most people save so little money.
Instead, automate your savings to make it the first transfer that goes out after every single paycheck. If you aim for a 15% savings rate, then transfer 15% of each paycheck to your savings account, to paying down your credit card debt, or to your IRA or 401(k). You can split your direct deposit to go into two accounts, set up recurring debt payments, or automate recurring transfers to your investment accounts. You can also automate your savings through apps like Acorns that round up your debit card purchases and transfer the difference to savings. Another option is Digit which will analyze your spending and automatically save the perfect amount each month.
Regardless of how you automate your savings, the goal remains the same: to make savings your first financial priority, not your last.
8. Automate Your Investments
When you pay off your high-interest debt and start thinking more about investing money to build wealth, it raises a question: What should you invest in?
You can ask your friends and family members, but they might not offer much help. They might tell you to invest in stocks or real estate, but not how to choose an index fund or how to approach asset allocation.
Luckily, anyone can now get investment advice for free, along with automated investments and portfolio rebalancing, as long as they’re willing to accept advice from an algorithm.
While many novice investors feel uncomfortable entrusting their hard-earned money to a robo-advisor, the simple fact is that robo-advisors know more about how to choose investments than you do.
Choose a robo-advisor that fits your current wealth and budget. Many offer free options, and all can automate your investments for you. Start with our guide to the best robo-advisors and put your money to work immediately.
9. Cancel Your Subscriptions
Ongoing subscriptions are a corporation’s dream/ They only have to sell you once, but they get to keep charging you money every month from here to eternity.
Their gain is your loss. Do you really need a beauty box of samples every month, razors delivered to you, or a premium online music service? Do you really need to pay separately for cable TV, Netflix, Disney+, Hulu, and Amazon Prime?
You probably love one or maybe two of the premium subscription services you use. The others you sometimes use, but they don’t get you excited. Cancel them and find free or inexpensive alternatives. For example, the average cable TV bill is over $100 per month. You can stream Netflix for a tenth of that, or better yet, stop watching TV altogether.
As a quick exercise, write a list of every single subscription service you pay for. Don’t forget the ones that bill you annually. There are third-party services like Billfixers that can help you do this.
Prepare to be surprised at just how many you’ve opted into over the years. Then convert that surprise into motivation and go on a cancellation spree to simplify your finances, declutter your life, and save you money every month.
10. Hone In on 1-2 Financial Goals (and Set the Rest Aside for Now)
Set too many goals, and you lose focus. They become overwhelming, you stop making progress, and then you stop paying attention to them altogether.
Instead, choose one or two major financial goals to lean into. One of them must be retirement because everyone needs retirement investments. (Spoiler alert: You can’t work until you’re 92.)
That means you can choose up to one additional financial goal to focus on at a time. It could be paying off your credit card debt or student loans, saving a down payment for your first home, or putting money aside to help pay for your kids’ college education. Or you can funnel all your money toward financial independence and retiring early
Whatever you choose, don’t dilute your financial goals by spreading your money and attention too thin. The magic happens when you focus your energy on one to two tangible goals. Try to do 10 things at once, and you make little or no progress toward any of them.
11. Track All of Your Financial Accounts in One Place
Nothing helps you simplify your finances like seeing all of your financial information summarized on one page. It helps you step back and gain perspective on the big picture. You can see all your assets, debts, and liabilities and track your net worth over time.
I personally use a combination of Mint and a spreadsheet of a few critical numbers like monthly income, savings rate, investable net worth, and FIRE ratio (the percent of my expenses I can cover with passive income from investments). Mint works well because it connects to all of your financial accounts in real time for live net worth information at any given moment. See our full Mint review here.
Beyond keeping your finger on the pulse of your finances, tracking these crucial numbers keeps your wealth both tangible and front-of-mind. It’s all too easy to succumb to temptation when choosing between buying that sexy new gadget now and saving money for some far-distant goal like retirement. But when you watch your net worth rise every single month, it makes your wealth feel more real.
As they say in business, that which gets measured gets done.
12. What You Can’t Automate, Delegate
Some tasks can’t be entirely automated. Somebody needs to prepare your tax return, and no AI can do it for you (yet).
But that doesn’t mean you need to spend every Saturday in March working on your taxes. To simplify your financial life, delegate the task to an H&R Block professional and spend those Saturdays with your kids or friends instead.
You’d be surprised at just how many tasks you can delegate to someone else. For a few dollars an hour, you can hire a virtual assistant to find the best travel deals or manage your calendar for you. They can even set up all the automations outlined above.
What personal finance tasks have you spent time on recently? The odds are good that you can automate them, and if not, then delegate them to someone else to handle for you.
Final Word
The more wealth you build, the more complicated your finances get. Or so they say.
My savings, investments, and bill payments are all automated. I still check on them every month to make sure they go smoothly, but they keep chugging along without any action required on my part. My wife and I keep few bank accounts, no ongoing debt, and track all our financial accounts through Mint with monthly reports delivered electronically to my inbox.
The fewer the complications that entangle your finances, the less time and mental energy you have to spend on managing your money and the more time and energy you can spend on growing wealth.
