This is a guest post by Logan of Money Done Right
Do you want to simplify your finances? Managing your finances can be an overwhelming task, especially if you’re new to budgeting. It’s even more difficult when you have a large number of accounts to keep track of.
When you simplify your finances you reduce your stress and it helps you achieve your goals. You’ll have a better idea of where your money is going and what you can do to improve your strategies.
How to Simplify Your Finances
These are four of the best ways to streamline your financial life and take full control of your money.
American households are deeply in debt. Debt is often the chief barrier to financial freedom. It’s hard enough to make a single payment on time, let alone monitor the balances of several different debts. Carrying more than one balance also makes it harder to keep track of your progress.
Debt consolidation offers several benefits in addition to simplification. You can often qualify for lower interest rates along with a lower monthly payment. That can help you get out of debt with less financial hardship.
You’ll also be able to make progress on all debts by making a single payment each month. Plus, you won’t have to decide which payments to prioritize.
Consolidation is a good idea if you’re struggling with credit cards or another form of high-interest rate debt. Even a small reduction in your interest rate can lead you to spend a lot less money over the term of the loan, especially if you’re paying off a high balance.
People with credit card debt should also consider applying for a balance transfer credit card. Many of these cards come with low balance transfer fees along with an extended introductory period during which you won’t pay any interest. This gives you more time to pay off your debt without having to worry about interest.
Make sure that you’re not continuing to add to your debt while you’re trying to pay off your current debt. Learn to live within your means or better yet, below your means, especially while paying off past purchases.
Limit Your Subscriptions
Digital subscriptions often seem like a great deal, but fees of just $10 or $15 per month can add up if you’re paying for multiple subscriptions. Many people don’t even know how much money they’re spending on streaming services and other minor monthly costs.
Start by going through recent bank statements and identifying every service you pay a subscription fee for. You’ll be surprised at how much you spend each month on these services.
Cut down on everything you don’t use regularly. Even removing one or two subscriptions can help you find a lot more room in your budget. Keep in mind that there are awesome apps like Trim that can help you slash your subscription costs.
Similarly, you should try to cut your spending on things like cable and phone bills. More and more people are getting rid of cable completely, but you can save money even if you aren’t ready to give it up.
Many bill negotiation services will talk to your service provider and attempt to lower your bill. Most of these companies would rather charge you less than lose your business entirely.
Pay Bills Online
Keeping track of your bills can be just as complicated as paying off debts, especially if you have to manage all that paperwork yourself. It’s easy to lose or forget about a bill until it’s too late, even if you have the money to pay. Online payments can simplify the whole bill-paying process.
Once you set up online payments, the money will automatically be deducted from your account whenever you need to pay a bill. This removes the risk of late fees and helps you stay on top of your bills without having to do any work at all.
Online payments are available for a wide range of bills including cable, phone, rent, and even student loan debt. You can configure payments through your bank’s website or mobile app. You may even be able to use a credit card, allowing you to earn rewards on each payment.
Avoid Investing in Individual Stocks
Most people think of investing as buying shares of specific stocks, but this usually isn’t the best strategy. You can generate more predictable and sustainable returns by putting your money in an actively or passively managed fund. This approach is also great for newbie investors because it allows you to invest without having to research individual stocks.
Traders have several choices when it comes to investing in a fund. Index funds are a popular option that mirror the performance of a market index like the S&P 500. You won’t lose as much money if a single stock drops, and you should earn positive returns over time.
Of course, index funds are still vulnerable to crashes and other problems that affect the entire market.
ETFs are similar to index funds, but they can be traded throughout the day like any other stock. Index funds, on the other hand, can be bought and sold only at the end of the trading day.
They’re both great choices for anyone interested in safe results for retirement or another long-term goal.
Unlike ETFs and index funds, mutual funds are actively monitored by a fund manager aiming to beat the market. Some mutual funds charge fees, so make sure you’re confident that they’re worth the extra cash.
Many investors have money in ETFs, index funds, and mutual funds. Just as funds, in general, give you more diversity than stocks, multiple funds can help you maximize diversification.
Consult with a financial advisor
Don’t be afraid to speak to a financial advisor if you need assistance with your investment strategies. While it can be expensive, expert financial advice is worth the cash if it helps you reach your goals. This is especially true if you’re investing a large amount of money. Improving your return by even a fraction of a percent could substantially increase your returns.
Managing your finances can be complicated, and it’s much easier to keep track of your money once you’ve taken the time to simplify your financial life. These four tips to simplify your finances will help you develop better financial habits while spending less time monitoring your money.
Logan is a CPA, personal finance expert, and founder of the finance blog Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money.