One of the reasons people do poorly at managing their finances is that they make it more complicated than it has to be. The truth is there are many little things you can do that will help make things easier. Whether you change the way you pay your bills or consolidate, you can be successful. Let’s look at how to simplify your finances.
Pay Bills Automatically
When you set your bills to be paid automatically, you never have to worry about your bills being late. To ensure you have money in your account to cover these bills, consider having your paycheck deposited automatically. This will make your life so much easier.
We pay our mortgage and internet automatically. We live in a more rural suburb, so most of our utility companies don't offer automatic bill payment.
Use Online Bill Pay
The only time I write checks these days is for things I need to pay for at my kids' school. I use our bank's online bill pay to make all our payments to save both time and money (on stamps and checks). As soon as I receive a bill, I schedule it in my bank's app so I don't have to worry about whether I paid the bill already or not.
Save Money Automatically
If you have trouble saving money, consider setting up an automatic transfer. Many banks allow you to transfer money from your checking to savings automatically. For example, you might setup a transfer of $200 per week. When you do this, you learn to treat saving money like any other bill and actually do it.
Close Excess Accounts
You may have had good intentions for opening several savings accounts. However, the more accounts you have, the harder it can be to manage them all. Close any accounts that you’re not utilizing and focus on your most used accounts.
We have both a savings account and a money market account. The savings account is more liquid, since I can transfer money from savings to checking instantly. The money market account earns more interest, but since it's an internet-only account it takes a few business days to transfer money between accounts.
I have all our sinking funds split between the savings and money market accounts and simply keep a spreadsheet to keep track of how much is allocated for everything. I would go crazy with almost 30 different savings accounts (which is about how many line items I have in my spreadsheet).
Use the Cash Envelope System
If you want to make it super easy to stay on budget, use the cash envelope system. Each pay period, decide how much money you want to spend for each of your variable expenses and then put that money into envelopes for each expense. For example, you might put $150 a week into an envelope for groceries. Use this money rather than reaching for your debit card. This will force you to stick to your budget.
Get Out of Debt
Besides just saving money on interest and having debt payments, when you get out of debt life gets way less complicated! You don't have a million different bills to pay each month (with due dates and minimum payments to juggle into your budget). Rather than multiple credit card bills, you can see your debit card spending in your checking account and maybe just have a few utility bills that you can't auto pay each month.
Managing your finances doesn’t have to be difficult. All you need to do is make small changes to simplify your finances. Pay your bills automatically. Save automatically. Consolidate your bills as much as possible. Close excess accounts. Use the cash envelope system. Soon you’ll be able to think about your finances without getting frustrated.