How to Simplify Your Finances

Managing your finances doesn’t have to be a whirlwind of numbers and scattered bank accounts. Your finances also don’t have to control your every move or leave you feeling stressed and anxious. Simplifying your finances makes it much easier to put you back in complete control.

Here’s what you need to know about simplifying your finances so that you can have a more thorough understanding of where your money is going.

Consolidate Your Checking & Savings Accounts

In most cases, having a single checking and savings account is enough. If you have several checking and savings accounts, now is a good time to consolidate them. Otherwise, you have to keep track of various balances and keep close eye on them to ensure that you don’t overdraft or fall below the minimum balance requirement.

When consolidating accounts, there are several factors you’ll want to consider. For example, you likely don’t want to consolidate all of your checking accounts into one that has the highest fees, as this will cost you more money in the long run.

Sit down and look at all of the accounts you have, to include fees and the interest rates. Pinpoint which account is best and then put all of your money into it.

Embrace Automation

Automation can have a huge impact on your finances. For example, you can automate savings by setting up automatic transfers to your savings account. By setting aside a set amount of money each paycheck, you’re able to build your savings without being directly involved. This makes saving much easier.

Another option for automation is to use automatic bill pay. With automatic bill pay, you can make sure that all of your monthly expenses are paid on time. This means you’ll never have to worry about being hit with a late fee or negatively impacting your credit score.

Consolidate & Digitize Financial Records

The more financial accounts you have, the more paperwork you’ll have to deal with. If you’re like most people, you have piles of paperwork in your home, some of which you’ve likely never even opened or read.

Just as you’ll want to consolidate your financial accounts, you’ll also want to consolidate any financial records that you’ve collected. Start by switching your account statements to be accessed online versus sent in the mail.

Another option is to scan and digitize any vital records that you need to hold onto for tax or historical purposes. Be sure to keep any notarized or government-issued records in their original format.

Pay in Cash

Credit and debit cards make buying things quick and convenient. But plastic also makes it much harder to keep track of where your money is going. By only paying for items in cash, you’re able to keep a close eye on what you’re spending your money on.

Give yourself a daily allowance. It’s quite eye-opening to see just where your money is going on a day-to-day basis.

Cut Expenses

When’s the last time you used your gym membership? Or watched the other streaming service that you pay for each month? Another way to simplify your finances is to reduce your expenses. The more expenses you have, the more there is to track.

Create a financial roadmap and write down all of your bills. Once you have every expense listed, determine which ones you can do without. By cutting expenses, you’re not only able to save money, but managing your finances also becomes more streamlined.

Set a Goal to Become Debt Free

After cutting expenses, you can take things one step further by setting a goal of becoming debt-free. Debt isn’t just expensive; it also makes your financial life even more complicated to manage. One of the most effective ways to simplify your finances is to decrease the number of debt payments that you have.

Becoming debt-free won’t happen overnight, but if you want to make a dent in the amount of debt you have, you’ll need to have a plan.  If you want help in becoming debt-free, consider working with a financial advisor. Careful Cents has a list of the best financial advisors so you can find one to fit your specific needs. 

Invest in Funds

A diversified investment portfolio is crucial if you want to experience the most growth. But, investing in individual stocks requires a lot of time and effort. You have to research, buy, track, and sell every stock in your portfolio, just like the experts in New York. 

If you want to avoid investment hassles while still making a good return on investment, consider investing in exchange-traded funds or mutual funds. You may also want to invest in index funds particularly small cap indexes like Vanguard VSMAX.

Conclusion

Simplifying your finances makes budgeting and keeping track of your money a lot easier. Follow these tips and tricks so that you can improve your financial health. The more simplified your finances are, the less stressful they become to manage.

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