Do some simple simplifications and you will know that you can finally master your finances with renewed enthusiasm. In fact, some of the simplest actions you can take can be very effective in being able to manage your finances. If you can turn those simplifications into habit you will surely have it easier to master your finances and your financial life will flourish with those simple changes as well.
Make your life simpler by simplifying your finances:
- Do you have multiple financial accounts? Simplify it! Ask yourself if you really need 7 savings accounts, 5 checking accounts and multiple retirement accounts. If you are an individual you should not have that many and you may just need one of each at this point. If you are a business that is a different story but still make sure you just have what you need to function so that it is simple to manage. Make sure that you pick the best accounts from institutions you trust and the rest you can close.
- Schedule bill payments for once a week. Select a day in a week to pay your bills. Doing this will ensure that you will not forget to pay your bills since you have a scheduled time to sit down on your bills and to actually pay them on the same day. It is also advised to pay your bills on time to make things simple, since late bills will add interest expense that is easily avoided. Just make sure to leave enough time for all payments to post on schedule.
- Pay bills electronically or online. You can pay online either manually or automatic. Not all electronic bill paying systems pay automatically and some you will have to set it up first with your approval. Most checking account will allow any type of bills payments on their online portal connected with your checking account. As mentioned, you can set this up manually or automatically. The best part of this is you do not have to do any paper checks and stamps.
- Paying bills automatically best works with fixed payments like mortgage, fixed premium insurances, car payments and other types of loans.
- Use your utility company’s level-pay option if available. Keeping with your monthly budget can be very challenging and if your electricity bills spike during the summer and your gas bills increases during the winter, these could ruin your budget. With the level-pay option things will become more predictable.
- Save on autopilot. It has been said to pay yourself first. Automatically save a portion of your earnings before you use up your hard earned cash. If you are trying to save money at the end of the month and little or nothing remains that is not saving and a clear sign that you are struggling to pay yourself first. Expenses tend to use up all available cash you have available as funds as if it was meant to use all your money for the month. So before you can spend all your money set some aside for yourself on autopilot.
- If you are employed, your employer’s HR department should be able to help you to automatically deduct your paycheck to a savings account. If you have no option to do this on auto pilot, just withdraw and deposit a portion of your paycheck or hard earned money into your designated ‘pay myself’ savings account.
- Once a month review how much you spend. Use a spreadsheet or financial software to chart all of your spending. Do this at the end of each month to account for every penny you spent. Doing this will let you know where you are spending more than you should. You will be surprise of the outcome to which areas you spend your money in. You may be spending more than you realized on things like morning coffees, work lunches, and happy hours than you actual want to.
- Review your bills and spending. This is one of the most effective ways to enhance your budgeting activities.
- Keep or discard, re-evaluate your record keeping system. Most of us keep more paperwork than necessary. Get advice from an accountant to determine how long to keep each type of record.
- It is important to be organized. Set up your filing system by the month or by the bill and stick with it.
- Most items necessary for tax purposes can be kept for a maximum of seven years (this can vary in different countries, seek advice from your local accountant). Most other records are safe to discard at the end of the month. Remember that many records are available online.
- Place current bills in one location to avoid loss. Keep your shredder handy and use it when the time comes.
Your finance can be complicated but with a few simple adjustments you can make you financial life much easier. Develop systems and habits that ensure the most important financial activities take place each month in a timely manner. Having habits and being consistent are key components to a much simpler and productive financial life.