Last updated on July 14th, 2020
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There are simple steps to improving every aspect of your life. In this article we are looking at simple ways to declutter and improve your financial well-being. Think of simplicity as cutting out anything in your life that stands between you and your goals and passions rather than a way to save time at all costs. Simplicity is a journey of exploration of what works best for you.
Here are some tips to consider when you’re on a purge to become closer to your financial goals:
1. Simplify your filing system for financial documents
The best way to end the stress of piles of bills and other paper work is to file them away by categories in a dedicated cabinet. Shred things like receipts, invoices, year old bank statements, credit card offers, pay stubs after double checking them, etc.
2. Make saving and expenses automated
Set an automatic transfer from your checking to your savings account. Put your regular bills on auto-pay so you never miss a payment or worry about the deadlines. The power of automation is clear.
3. Consolidate your accounts and combine accounts if married
Some people bank with more than three financial institutions at once, and may also have a spouse with a set of their own service providers they deal with. Tracking your finances becomes confusing if you have to check them in ten different places. Analyze which accounts you actually need and use and consolidate the rest of them.
4. Focus on one financial goal at a time
Simplify, focus, and prioritize. Do not attempt to save for a down-payment, save for an emergency fund, and tackle debt all at the same time. Once you reach one goal, work through to the next; this will make your financial goals more attainable.
5. Use cash
Using cash for discretionary spending makes your budget tangible. Use envelopes that represent your spending categories to simplify things.
6. Track your spending at the point of sale
Carry a notebook or tap your expenses into your phone as soon as you make a purchase. This strategy will keep your impulses under control and you will think twice about them.
7. Go paperless
It’s in your best interest to set up paperless billing with vendors that provide that option. Reduce your junk mail. Shred old statements and bills.
8. Cancel all subscriptions
Small subscriptions have a tendency to sneak up on you. Cancel any of them you can start from scratch.
9. Quit signing contracts
Phone plans, gym memberships, and long-term leases are common examples. Negotiate better rates, pay in advance, and do not sign into contracts. Explore the alternatives.
10. Consolidate high-interest debt
Be careful not to use this strategy as a transfer of responsibility and avoid falling back in the same trap. See it as simplification into one source to save a lot of interest in the process.
11. Create artificial scarcity
This theory suggests that you automatically transfer a portion of your income into savings and budget on the rest. It works if you actually spend less than you earn.