5 Ways to Simplify Your Financial Life

By Jake T. Erlendson on March 23, 2015

You’re busy. I’m busy. Aren’t we all busy? All our obligations often add up to crazy schedules and not enough down time. There are ways, however, to eliminate some of this busyness by simplifying our financial lives. Here are five tips to get you started:

1. Pay automatically.

An easy way to shrink your financial to-do list is to simply pay your bills automatically. Just about any bill imaginable can now be automatically paid via your checking account. Paying on autopilot can also help protect your credit score by making sure payments arrive on time. Even just a couple of tardy payments can significantly hurt your FICO score. A lower score will make it more expensive to borrow whether it’s a mortgage, a car or some other purchase.

2. Consolidate your investment accounts.

Ideally, you will have your investments with one financial custodian such as Charles Schwab or the Vanguard Group. Your accounts and, if you’re married, your spouse’s accounts can all be linked together. Don’t overlook consolidating old workplace retirement plans such as 401(k)’s and 403(b)’s from previous employers. You can transfer these accounts into one Individual Retirement Account rollover. If you do this, make sure you request a trustee-to-trustee transfer. It’s best not to have the check sent to you personally.

3. Consider buying budgeting software.

Budgeting isn’t fun, but it won’t be time consuming if you use budgeting software. This type of software, Quicken probably offers the most popular version, makes budgeting faster and more accurate because it keeps track of your income and expenses. Over time, you’ll see how much you’re spending in each category and be able to make adjustments to your spending habits.

4. Automate your savings.

You are apt to save more if you do so without writing checks. Instruct your bank to transfer money from your checking account into whatever accounts you have set up for saving, whether it’s for retirement, a new vehicle, a house or other financial goals. Also vow to automatically increase your retirement savings every year. Over your working life, bumping up your savings by just one percent can generate a dramatically larger nest egg. You can discover the power of increasing your savings by just one or two percentage points by checking out Vanguard’s contribution increase calculator.

5. Don’t be a market watcher.

If you invest in a diversified portfolio of low-cost index mutual funds that cover the basics – bonds, domestic and international stocks – you don’t need to be regularly checking what’s happening to the stock and bond market.

Learn More…

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