We are caught up in our hectic daily lives as we try to juggle our personal and professional responsibilities. With the current financially uncertain times adding to our woes, it is critical that we stay on top of things by managing our money and simplifying our finances.
Whether you are a young adult embarking on your financial journey or an old-timer, here are nine straightforward tips to help you streamline your financial life:
Prioritize 401(k) plan investments
Chipping in your company-backed 401(k) plan is a terrific way to simplify and consolidate your finances, especially if you save an amount that is sufficient for your company to make a full matching contribution.
Choose a balanced mutual fund
A balanced fund consists of a stock, a bond, and occasionally a money market component, all together in a single portfolio. This type of fund is designed to attain a balance between current income and asset growth.
Choose a low-cost, balanced fund for 401(k) plan investments from yours as well as your employer’s matching contribution. Balanced mutual funds provide a combination of income and safety, along with moderate capital appreciation which can help you counter rising costs and higher gas prices.
Set up direct deposit
After deducting your contributions to the 401(k) plan mutual fund out of your paycheck, the balance left over is the money you may spend on your needs.
As one of the short-term financial goals, sign up for an automatic direct deposit of this balance amount into your bank account from your paycheck.
Consolidate bank accounts
Elementary financial discipline calls for simplifying your financial life by using just one bank account for all your transactions. Look for a basic no-frill checking account with minimum balance requirements and zero monthly fees.
You may not earn much interest on funds in such an account, but it will go a long way in streamlining your fiscal life.
Automate your savings
It is easier to meet your savings targets when you automate them. Set up your bank account in such a way as to transfer funds on a regular basis from your checking account into your savings account.
If you find it a challenge to meet your savings goals, the automatic transfer is one of the simplest solutions to the issue.
Consolidate credit cards
Streamline and simplify your finances by keeping only one, or a maximum of two, credit cards with you to use. With several credit cards, you are more likely to run up needless amounts in annual fees. Ideally, keep one cashback card and try to put almost all of your out-of-pocket expenses on that one card.
Depending on different promotions, you could end up saving substantially in cash back rebates, apart from not having the hassle of maintaining and tracking multiple credit cards.
Automate credit card payments
With just one or two credit cards to maintain, you could further simplify by setting up regular payments of the full monthly outstanding balance on your card, from your bank account. This way, you will never miss a credit card payment, and avoid the ridiculously high charges levied by credit card companies in case you do.
Since the interest rates on carried-over balances are also astronomical, you should always avoid carrying over a balance on your credit card.
Automate recurring payments
Once you have taken care of the credit card bill, you should look to simplify other recurring bills like:
- Electric bill
- Water bill
- Gas bill
- Student loans
- Car payments
Spare some time to initially set up automatic payments for these recurring expenses directly from your checking account. You will never have to worry about incurring late fees or missing bill payments again.
Minimize the use of cash
You can streamline your finances by reducing the use of cash. This simple practice will make it much easier to track your spending, thus giving you better and tighter control over your budget, and your expenditure patterns.