5 Steps on How Simplify Your Financial Life

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You hear it all the time. I can’t believe she is 1 years old. I can’t believe it’s already April. I can’t believe it’s already 2016. Face it, time moves really fast and as we age our lives become more complicated. In fact as we get older it only gets more so. There is something to be said about having a simple life. When you think about a simple life you think of a cabin in the woods, with no internet. You know everyone by their first name, and you don’t care about all this new fangled technology. Living in the woods is great but there are actually better ways to simplify your life than that: (although if that’s your thing, totally fine)

Let me first preface this with, yes these can be obvious, but how often do we forget about the basics:

1. Stop opening new credit cards

Why do you need so many credit cards? The max you should have is two if you are married. I know there are reward points for spending money at different restaurants or gas stations, but is the extra 50 cents worth the hassle of paying off the five credit card bills every month. How often do you forget to make a payment or use all the cards you have? If you have your own business this makes sense. A card for your business, otherwise stick to the one card per person rule. If your bank requires you to have one of their credit cards, ditch that bank! Before you cancel a card make sure it’s paid off this way your credit score won’t take a hit.

2. Combine your bank accounts

One of the biggest struggles I see with clients when it comes to not just credit cards, but to bank accounts, is the amount that they have. It goes something like this. Well, we got married and never combined accounts, or well, I was divorced and my new husband and I never combined accounts. Or there are just 4 or 5 accounts as a household. Why so many? If you can manage your financial life you shouldn’t have to have multiple bank accounts for multiple things. You need, a checking, a savings account, and an emergency fund account, somewhere that makes it tough to spend that money. Combining accounts, also shows complete trust in your partner and who knows it may force you to have to talk about your finances!

3. Use automatic bill pay

I’m still baffled that more people don’t have automatic bill pay set up. I get that a generation gap exist, between me, someone who grew up using computers and online banking, and someone who grew up writing checks and balancing a checkbook. That’s the best part about technology, you can use it to simplify your life! One of the biggest time wasters to me is paying bills, especially if you don’t have to. So, start setting up all your utilities, mortgage, rent, cell phone, auto insurance, etc. on auto bill pay and make your life easier. You can still have the company email you notifications that the charge is taking place on “xx” date or that it is for “xx” amount. This way you can contact them if there is an issue, otherwise you are free to care about other, more exciting things. If you still like writing checks, use your banks bill pay feature, which will send out a check from your account to the company or person you wish on pre-deteremined intervals, wow!

4. Have an emergency fund

Simplifying your life also means a stress free life. If you don’t have living expenses of around 3-6 months saved up your life could get pretty chaotic if something were to happen. Simplifying your life also comes by having this in place. It’s the preemptive strike on financial stress. Where do you stash the cash? I like Ally bank, an online bank that pays high interest in a plain savings account. No fees, no minimums, just open an account and deposit your money to start earning interest.

5. Hire a financial advisor

Face it, you saw this coming. The best way to simplify your financial life, is to let someone else worry about it! Not only is the investment landscape vast, but the types of accounts will be specific to your tax situation. Is a Traditional IRA or ROTH IRA better. Should you leave your old 401k, or 403b where it is or roll it to an IRA? If so what should you invest in? Should it be a mutual fund or ETF, or stocks? How much or how little into any or all of those? I could go on, but a financial advisor can mange not only your investments but your financial life, to better help you focus on the things that are fun to you.

Even if you aren’t stressed about your financial life, why not simplify it and create even more freedom for yourself? Change is good, but simplification can be better!

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