How to Simplify Your Finances?
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Many of us declutter our homes even before the new year starts or right around spring cleaning time. But have you ever thought of decluttering your finances to simplify your financial life?
When I started this journey into minimalism, I soon found myself decluttering one important aspect of my life—finances. Because, like many things, money is complicated.
Think of the many bills to pay, investments, savings, mortgages, taxes, etc. Finances can seem so overwhelming that it is easy to mismanage them, overspend, or make other poor money decisions.
If you feel that your financial life is out of control, I encourage you to simplify your finances; here are some compelling reasons why you should do so.
Why Simplify Your Finances?
Get Rid of Unnecessary Bills and Expenses
It’s possible that you don’t have the best deal on car insurance premiums, or you keep paying for subscriptions even though you no longer make use of them.
In this case, it is to your advantage tosave moneyby trimming out the unnecessary bills and expenses. After all, it could be money you could put to work on something more important.
Make Better Financial Decisions
With less clutter, you’ll have a clearer view of your finances, thus you are less prone to making poor money decisions.
Make Better Use of Your Time
I’m a firm believer that “time is gold” and wasted time = wasted money. So, if I waste my time digging through a pile of receipts and records because I am disorganized, it also means wasting precious time that could have been used to earn more money.
I bet you’d rather spend your time on income-generating activities or doing things that matter. Having a decluttered financial life is one way to free up your time for more meaningful pursuits.
If you want to simplify your finances, here are simple tips to help you lighten your financial load.
Financial Decluttering Tips: 9 Ways to Simplify Your Finances
1. Gather Your Financial Information in One Place
Effective decluttering begins with identifying what you have and what you can let go of. Start the process by gathering your financial information in one place—your assets, debts, expenses, savings and checking accounts, credit cards, and any other financial records.
Whether you want to make a list l or create a spreadsheet, what’s important is that you see your finances’ bigger picture.
You can also do this with apps like Mint, a finance tool that I think everyone should try. Mint allows you to link all your accounts to help you see a clear real-time view of your entire financial life in one place.It helps you track and pay bills in one place, get reminders on your due dates, and update you on what’s paid or unpaid. You can also set financial goals and Mint will help keep track of your progress toward those goals.
2. Settle Your Bills Right Away
If you’re the type of person who waits for the bills’ due date before paying, chances are, you’ll have a couple of bills piling up and it’s possible to overlook one or more of them at some point. There is no reason why you shouldn’t pay your bills ahead of schedule when you can; don’t wait until the deadline if you don’t have to.
Instead, write a check right away or pay online so it’s one bill settled crossed off your to-pay list. Also, when you pay your bills before the due dates, you don’t have to worry about incurring late fees.
3. Consolidate Your Debts
People have different opinions about debt consolidation as a good way to reduce the stresses of multiple debts. If consolidating several debts into a single debt makes life easier for you, why not? After all, consolidating your debts means you only have one creditor or bank to deal with, only one monthly payment to make, and just one due date and interest rate to handle.
4. Minimize the Number of Credit Cards You Use
It’s pretty common to see people using more than four credit cards nowadays, but if you want to keep your financial life simple, you don’t need a lot of credit cards.
Look at your credit accounts and see which you can let go and settle for one or two that you can use for expenses, emergencies, and rewards. Just remember that closing credit accounts can impact your credit score, so it’s best to keep your long-standing accounts open (even if you’re not using them) and get rid of the newer cards that have the least impact on your credit score.
5. Take Advantage of Automation
Technology has come a long way, to the point that you can automate many financial activities, so you don’t have to worry about forgetting them. Automation is as simple as automatically setting aside a portion of your paycheck from your payroll account to your savings account, as well as paying for recurring bills from your checking account month after month. Automation is so wonderful–you can go through your day knowing that these tasks have been handled for you automatically.
6. Pay with Cash When Shopping
For quite some time now, I have been using cash when shopping and I love how this helps me avoid impulse buying and unnecessary debt. No unnecessary debt = less stress!
7. Close Old Accounts
Do you have a savings account that you never use or too many accounts to keep track of? Save yourself the headache by closing those that are not useful to you and consolidating your finances.
For instance, you may be able to combine two different retirement accounts or close an old mutual fund that has a small amount of money in it.
8. Declutter your expenses
If you are constantly buying stuff you don’t need or spending too much money on subscriptions you barely use, maybe it’s time to declutter your spending.
To do this, you have to know where your money goes. Start by checking out your bank/credit card statements to know what expenses you should cut out. When you stop spending or limit your spending on unnecessary things, obviously you’ll have moremoney for savingor for things that matter to you.
9. Go Paperless
If you hate keeping receipts or bank statements, go paperless. You can choose to receive your bank or credit card statements all in one email or use online or software-based account aggregation tools such as Mint.
Another benefit of going paperless is that it takes up less space and is better for the environment.
Final Thoughts
Having messy finances can lead you to overspending, missing bills, or neglecting debts. But once you start tidying things up and see the bigger picture clearly, it is easier to develop clearer goals for your money.
So, if you haven’t started clearing your financial life yet, I urge you to take action right now. There’s no other better time than today.
