Managing your personal finances can be complicated! It requires time and knowledge to be able to effectively manage finances. Taking steps to simplify finances will save you time and help to take control of your money. You can then focus your time on financial matters that may take a bit more time such as investments, tax planning and other money goals.
In the past year, I have been looking into ways that I can simplify my family’s finances for 2 main reasons. I wanted better control of our money and secondly to spend less time managing it. I now spend less than 30 minutes each week managing our finances due to the systems I have put in place.
Disclaimer: I am not a financial planner or expert. All information in the post is based on my research, opinion and experiences. Any action you take based on the recommendations from this blog is at your discretion.
An important task before simplifying your finances is to understand where all of your money is. Take a look at Calculate Your Net Worth. Net worth gives you a picture or a “financial snapshot” of where all of your money is and what debt you may have. It’s a good starting point before you jump into managing your finances.
Here are 10 ways to simplify finances to control your money and to save time doing it:
1. Create a work space to work on your finances
This first step is a physical task. You need an organized workspace and filing system for your finances.
Purge papers and documents that are no longer needed. The majority of the papers you receive is useless.
Then create a filing system for the important documents you need to keep (i.e legal property documents, wills, personal directives, receipts for the upcoming tax year). When you need to refer to these documents then you know exactly where to find them.
Having a clean, pretty and organized area will help to motivate you to sit down and manage your money.
2. Credit cards and bank accounts
If you limit yourself to 1 or 2 credit cards than you only need to manage those ones. The other option is to use cash or debit more often.
The same for bank and investment accounts. The more accounts you have, the more time and effort is required to keep on top of these accounts. You may be paying more bank fees as well. Keep it simple and stick with one primary bank and close the rest.
3. Bundle your services
Combining services such as cable, phone, internet or utilities can help decrease the number of bills to be paid. You can usually save money by bundling the services.
4. Automation is the way to go!
Simplify finances by setting up electronic automation to do the work for you.
Automate your savings
Every time you get paid, set up an automatic transfer of money into your savings account based on what is laid out in your budget. Use this tip to save up for your emergency fund, an upcoming vacation, down payment for a home, and retirement. Set it and forget it!
Automate bill payments
You can also set up automation of bill payments for utilities, cell phones, cable and credit cards. This automation will help avoid late payments and fees. Start small with 1 or 2 bills and work from there.
For more in-depth information on how to automate your finances check out: How to Automate Your Finances to Save Time and Money
5. Go electronic to cut down on paper waste
Set up your statements/bills to be delivered electronically.
Filing your taxes electronically cuts down on the paper clutter too.
Choose e-transfer of money over writing paper cheques.
6. Create financial templates to save time
If you do your own taxes, create a tax worksheet that you can fill in before doing your taxes. This will ensure that you will include all tax-deductible items and specific receipts.
Create a grocery/meal planning worksheet that you can print to help you plan and stay within your grocery budget. Check out the meal planning template in this post: 9 Steps To Effective Meal Planning
If you have a business, there are many templates that you can create to save time (invoices, expenses, income template worksheets)
Manage your finances by using pre-made templates for spreadsheets for budgeting, calculating net worth, and financial goal-setting.
7. Trim unnecessary expenses
Do you have an ongoing subscription for a product or service that you don’t really use? (Gym, cable, music, magazines …?) Cancelling these unused expenses will trim down what you have to pay for.
8. Pay off debt
How awesome would it be if you didn’t have any debt? There are a few ways to tackle debt. One popular strategy is the debt snowball method where you pay off the debt with the smallest balance first while continuing to pay the minimum on larger debts. Once that debt is paid off you move on the next smallest balance.
The debt avalanche method is where you still pay the minimum payment on all debts, but now primarily focusing on the debt with the highest interest rate first.
9. Work as a team with your partner
Share family money management as a team. It’s important that both you and your partner are in the loop on what’s going on with your money and accounts. It is helpful to consolidate bank accounts and credit cards.
10. Separate email accounts
Have a separate email account that is dedicated to finances (i.e. bills, taxes) and official household business. Use a different email account for communication with friends and family. Take some time to opt-out of store emails and promotions as you most likely won’t read anyways. You will spend less time going through emails. And of course … inactivate email accounts that you no longer use.
Through the process of simplifying your finances, less time is required to manage your finances. However, I highly suggest you do sit down (in your nice new organized workspace!) and spend some time each week reviewing your finances. It takes me less than 30 minutes each week to see what income is coming in and what bills have been paid. I’m also updating my savings account spreadsheet so I know what every dollar is saved for. Check out this concept here: How organizing your money will make you a budget pro.
Simplifying your finances will allow you to use your time more efficiently. You have better control of your money and can use the extra time saved doing other things that are important to you. Get in control of your finances to live the life you deserve.
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