In the words of The Notorious B.I.G., “mo money mo problems.” We all live exceedingly complex lives, often juggling personal relationships as well as job responsibilities and hobbies. And if you’re constantly worried about money, that can make everything else in your life feel even more intense.
The good news is that if you’re able to simplify your finances, it can de-stress everything.
Overcomplicating your finances is easy to do. And being constantly overwhelmed can lead to inaction or cause you to abandon ship altogether instead of staying the course. That’s why it’s so important to keep your personal finances simple, especially when you’re just getting started. When you make things easier for yourself, you’re more likely to actually do them.
Consistently taking action will boost your confidence, which in turn inspires you to continue that all-important personal finance journey!
Ways to Simplify Your Finances
At the end of the day, simple actions done consistently over time will always beat going full Warren Buffet on your finances for two weeks and then giving up for the rest of the year. Below are a few ways to try simplifying your money game for improved financial success!
1. Simplify Your Budget
Now, if you listen to the pod, you may know that Matt is a fan of zero based budgeting, in which every cent is accounted for. This approach works great for some, but if that doesn’t sound like your jam, there are tons of other, much simpler budgeting methods!
Consider trying the 80/20 method, where you save and invest 20% of your income for retirement, and the other 80% can go towards your needs, wants, and that impressive Beanie Baby collection that you’re still hoping will be worth something someday. You can also try the 50/30/20 method, where 50% of your income goes to needs, 30% goes to wants, and 20% gets saved and invested.
If you need some help figuring out which budgeting method is perfect for you, be sure to check out our article on 4 Easy Approaches To Budgeting. Also read up on needs vs. wants!
2. Close or Consolidate Old Accounts
If you’ve got your savings or retirement funds strewn out across multiple different accounts, transferring them to just one account could greatly simplify your finances. Plus, you’ll have fewer passwords to remember and it’s easier to keep your financial information secure.
Consider transferring all of your savings accounts to an online High Yield Savings Account. You’ll earn much more interest than a traditional bank, avoid dumb banking fees, and be able to see everything in one place.
If you also have retirement accounts from previous employers, it’s time to roll them over. We suggest using Capitalize. It’s totally free, and helps you with the entire rollover process. Not only will you simplify where your accounts are, but you can also minimize fees at the same time!
3. Use A Simple Credit Card Strategy
It seems like every time I log onto Instagram I see someone touting a new credit card strategy that allows you to fly to Australia for 3 nickels and a krispy kreme donut (which are worth their weight in gold). While this might sound super cool, you don’t need to over-complicate things to reap the benefits of credit card rewards.
Try using our “Super Chill” credit card strategy to rack up rewards points without overthinking it. 80% of the time, it works every time 😉
Pro Tip- If certain credit cards give you additional rewards in different spending categories, try labeling your credit cards with a Sharpie or sticky note to remind you of which one to use! Here’s our full guide to travel using credit card points!
4. Automate Everything You Can
If you’re forgetful like me, money automation can play a key role in accomplishing your financial goals. You can automate things like bill payments, transfers into your savings and retirement accounts, and direct deposits from your employer into your bank account. When combined, these tasks could save you hours of work each week. While automation takes some time on the front end, it could save you loads of that incredibly precious resource in the long run.
Just make sure that this doesn’t turn into financial avoidance. It’s still important that you look at your bills and statements, and “feel the pain” of that money leaving your account.
5. Set Fewer Goals
Every school had that one kid who always spread themselves too thin by signing up for the track team, the school musical, orchestra, honors society, and the mathletes. Extracurriculars are great, but you don’t need to be that kid.
When you set too many money goals, you aren’t able to give your full effort and attention to any of them. That’s why it’s important to pick only a few, realistic goals. Then, give them your all! Accomplishing those tasks will build momentum that can carry you forward to achieve your other goals later on. Nothing is more discouraging than working really hard but never really accomplishing anything you set off to do because you’re unable to garner enough focus.
Start by picking one or two money goals. You can start with whatever is the most important to you, or check out the Money Gears for some advice on where to start. We’ve also got a whole post detailing how to set SMARTER Money Goals.
6. Track Your Expenses with Apps
Some people may prefer the old school method of tracking expenses with pen and paper, or by using spreadsheet software like Google Sheets or Excel. But there are tools available to make tracking your expenses easier. (And some of them are FREE!)
Apps like You Need A Budget, Empower, and Mint will simplify that tracking task by syncing to your bank accounts and credit cards. They can track your expenses for you, and your net worth, which makes it easier to decipher where your money is going. That way it’s crystal clear what you’re spending on – and where you can cut back.
7. Get Rid Of Debt ASAP
Making 10 different payments to 10 different debtors is the opposite of money simplicity. It’s important to get your debt under control if you want to simplify your finances. The quicker you can eliminate a few of those debts, the clearer your head will be.
The trick is to create a debt payoff plan and stick to it. If you’re looking for the simplest method, the debt snowball might be the way to go.
8. Stop Checking The News
Following the ups and downs of the market can cause you to overcomplicate things and implement riskier financial strategies. You might be tempted to buy or sell investments on a whim. If you’re investing for the long-term, the ups and downs of the market shouldn’t scare you! By constantly switching up your wealth building strategy, you’ll do more harm than good.
Remember, You can’t control the economy, but you can control how much you save, spend and invest! If watching the news gives you the itch to mess around with your investment accounts, check out our article on how to avoid financial FOMO.
9. Move Your Emergency Fund to a HYSA
Out of sight, out of mind!
If you’re constantly faced with the temptation to use your emergency fund for non emergencies, transfer it to a High Yield Savings Account. This makes it more difficult (and slower) to transfer it to your checking, preventing you from dipping into your savings account for impulse buys. Plus, you’ll earn a great return on the dollars you’ve stashed which will help you to hedge those savings against inflation.
Personally, I like using Ally Bank, because it has savings buckets which allow me to visually organize the money within my account, but there are tons of great High Yield Savings Accounts out there! CIT Bank is an excellent choice with killer APYs!
9. Go Paperless
Maybe it’s the Gen Z in me, but paper mail stresses me out. Sometimes I misplace it, or someone else takes the mail in and I miss it completely. Getting e-statements simplifies my life, because I know that all of my important documents can be found online. Plus, I like to think that I’m saving a tree in the process.
This one might depend a little on your personal inclination, but creating an organized system for storing digital statements and cutting some of that paper out of your life can really help simplify your finances.
10. Simplify Your Investments
Not only is buying single stocks riskier– it’s more complicated! There is so much more research to be done, and they’re subject to more volatility. I get the appeal, but it rarely works out in your favor. Plus, investing in single stocks complicates your financial life in a meaningful way.
If you want to simplify your finances, it’s a good idea to invest in broad-based ETFs and Index Funds. They provide diversification, are lower cost, and tend to outperform actively managed funds. Plus, you just don’t have to think about them much, especially if you’ve automated your contributions via a regular paycheck deduction.
Check out our post on investing for beginners. The goal is to build a set and forget portfolio that reaches your goals passively, without work or worry on your part.
11. Consider Renting vs. Owning
A lot of personal finance gurus hate on renting because you aren’t building equity. However, we don’t believe that renting is akin to throwing away your money. Housing is perhaps the most expensive personal line item in our budget, and different ways of living work best for different people.
Owning a home comes with more intricacies, from maintaining the property, tax implications, HOA payments, utility payments, etc. So iff you’re really seeking a simple financial life, renting could be easier for your lifestyle and your finances.
If you’re looking for more insight on whether renting or buying makes sense for your personal situation, check out:
12. Simplify Your Side Hustles
Side hustles are an amazing way to get ahead and make accelerated progress toward your financial goals. However, having too many side hustles can be a little exhausting! To simplify your finances → simplify your hustles and gigs.
Zipping from one place of work to another can gobble up travel time, and sometimes wearing too many different hats can take a toll on your mental energy. If you have five side hustles that bring in $100 each, consider the possibility of snagging one side hustle that can earn you $500.
Here are some freelance skills in high demand. The more you hone in on a specific niche, the more value you can provide and the more you can charge for your time.
Pro tip: Using a designated credit card for you side hustle spending will not only earn you rewards, but also simplify your expenses when it comes to accounting and tax time. Another option to consider is trying side hustles as a couple.
13. Declutter Your Finances (And Your Space!)
Something that really makes me lose my mind is “death by a million paper cuts.” Having tons of small tasks that add up to one giant annoyance is definitely something I prefer to avoid.
If this sounds like you, dedicate a day to doing all of those small tasks you’ve been putting off. After all, it’s always a good time for some financial spring cleaning! (even if it’s not spring time.) Pay that random bill that’s been stuck on your desk, make that appointment, roll over that 401k. Hell, even clean your house and organize your financial documents. You’ll feel so much better once you do!
14. Perform A Subscription Audit
Once upon a time, you could purchase a software once and own it for as long as it continued to work on your device…but we no longer live in that fairy tale world, sadly.
Now, the hot business model is subscriptions, and these companies bet on you being too lazy/busy to cancel them once you’re no longer losing them. Don’t let them profit off of your forgetfulness!
Just think, if you cancel $100 worth of recurring subscriptions, you’re basically giving yourself a $1,200 raise for the coming year. Using the rule of 173, this equates to $17,300 over a 10 year period! Yes, those pesky little subscription costs really do add up.
Remember, there are very few downside to canceling subscriptions. Because if you really miss the service, you can always re-subscribe!
The Bottom Line:
We want you prioritizing your finances, but we don’t want it to consume your life and soul like a dementor in Harry Potter. Money is a tool that allows you to live well and enjoy the things in life that you value.
When you simplify your finances, you’ll find that you have more mental bandwidth and feel much less financial anxiety. Dedicating less time and mental energy to your finances is actually the goal here, allowing you to enjoy your life and spend more time with the people you love and on the things that you care about.
Read more:
- 12 Cheap Hobbies to Try!
- Using financial stress to your advantage
- Should you buy it? (A question checklist)
Beer tasting notes:
While talking about ways to simplify your finances, we tasted the delicious Scorpius Morchella by Toppling Goliath. Big thanks to Kelsey for donating this one to the show! And as we’ve ramped up the podcast with an additional Friday episode every week, we could really use your help to spread the word about How to Money! Hit the share button, subscribe if you’re not already a regular. Or give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to get more people doing smart things with their money in these difficult times!
Best friends out!
