I enjoy reading many blogs that cover my FI hobby horse and learned that it is a good practice to open up my blogging venue to a guest writer. These opportunities allow me to fill a void or to reinforce topics that I covered along the way with a different perspective and a different voice. Today’s post is contributed by Amy Nickson, a passionate writer on finance. Amy is a professional blogger who has started her own blog Working Moms Word. Amy Nickson has some excellent posts on how to save to money and covers some very practical advice. Her piece on debt might provide a little leverage if you need to start making a change.
Today’s post is contributed by Amy Nickson, a passionate writer on finance. Amy is a professional blogger who has started her own blog http://www.workingmomsword.com/
Please share your opinions by commenting below.
7 Ways you can simplify and take control of your finances
The more you simplify your financial life, the more it becomes easier for you to manage it.
For some people, managing their financial life is an overwhelming task. They can’t manage their financial problems and responsibilities. The reason is, they are dealing with their finance in a difficult way.
And we all hate to deal with a difficult thing. Thus, many people start to ignore their financial problems and responsibilities. Soon their financial life becomes more complicated.
If you understand the ways that help to simplify your finances, you can take control of it easily. It also helps to simplify your role in your financial life.
Here are some 7 ways you can simplify your financial life:
1. Set a goal and prioritize it
You have to achieve many financial goals like paying off debt, opening retirement accounts, and saving money for a down-payments etc.
But, the truth is, you will never be able to achieve all the goals at a one time.
It is significant to set goals to achieve them easily. But, if you set multiple goals at one time, it will be difficult for you to achieve them easily. Because achieving a milestone takes time; you have to focus on the goal and work on it consistently to get the result.
If you try to focus on multiple goals at one time, either you will not be able to manage them properly or lose interest.
Instead of setting multiple goals, set one goal at a time and prioritize it. Because setting a goal is not enough, you need to prioritize it. By doing so, you can easily achieve the goal and move forward to the next one.
2. Keep minimum bank accounts
Most of the people prefer to keep multiple bank accounts. They open multiple checking accounts and savings accounts. Instead of keeping multiple bank account consolidate the accounts into a single checking account and a savings account.
You need to simplify your retirement accounts as well. If you have multiple 401(k) plans (Previous job), then roll over all the plans into a self-directed IRA account. By doing so, you can reduce a lot of paperwork and account fees. You can also be able to track your retirement fund easily.
3. Set auto-pay to pay bills on time
Some people forget to pay their bills on time and get penalty charges. Yes, not paying the monthly bills or late payments can hurt your credit score as well. The auto-pay system can be a life-saver for you. If you set an auto-pay, all your bill will be paid on time. Make sure all your accounts are properly linked to the checking account where you deposit the money.
4. Cut down junks
Allowing junk expenses increase the lifestyle cost unnecessarily. For example, any type of services that you don’t use (Gym subscription, multiple channels on TV, Netflix, unlimited Internet data, and email subscription) are costing you a lot of money. Thus, you need to keep the service that you use only. Eliminating the unnecessary services can simplify your budget and helps to save a lot of money.
You should avoid buying unnecessary groceries that you don’t eat. Avoid buying grocery items in bulk too. Try to make a list of things that you need before heading to the grocery shop. By doing so, you can easily manage your grocery shopping and food waste. You can save money on your grocery shopping as well.
5. Use cash as much as possible
Using a credit card is convenient, but it instigates you to make more purchases that you can’t afford. Using a credit card is easy, but you have to pay the bill within the stipulated time. Avoiding credit card bill welcomes debt. So, instead of using credit cards for day to day purchases, use cash. It will help you to stay within your affordability.
For example, once you spend all the cash, you will understand you can’t make further purchases. Remember, use a credit card only when you know you can afford the item with cash.
By doing so, you can manage your personal financial health easily.
6. Choose the right debt payoff strategy
You have to manage your debt in an efficient way to simplify your finances. Leading a debt-free life will help you to live a stress-free financial life. You can also focus on other financial goals like buying a home, saving for retirement, building an emergency fund, and investment.
But, getting out of debt is not easy; you have to pick the right debt payoff method to get out of the mess as fast as possible.
If you have multiple credit card debts with the higher interest rate, then try to pay them off as soon as you can.
You can take out a consolidation loan to pay them off. Make sure, you make the monthly payments on your new loan on time.
You can also pay off your debts by following the debt avalanche method. To do so, you need to target the highest interest rate debt first. Save money and make larger payments to the highest interest rate debt while making minimum payments to the rest of the debts. Continue it until you pay off your “target debt”. After that, you need to target the second highest interest rate debt by following the same rule. This process will help you to get out of painful debts.
If you have a home loan or student loan, then make sure you make monthly payments on time.
7. Follow a budget and revise it time-to-time
The first and foremost important thing which organizes your finances is a budget. Well, haters will say ‘budgeting’ is insignificant. But, to simplify the finance and to achieve your financial goal, you have to formulate a budget.
For example, if you want to get out of debt, then you have to put the debt payments on your budget including other mandatory expenses (Utility bill, gas, and grocery, insurance). It will help you to manage bills and debt payments. Well, you may need to cut down extra expenses. Sometimes, you may need to boost your income. Budgeting helps to track your money as well.
However, you need to make the necessary changes in your budget time-to-time. It will help you to get the best result.
You can easily create a budget using a free budgeting app on your smartphone. Go online to find out a good and simple budgeting app.
Lastly, most of the people don’t like to manage their finances as it takes a lot of effort and time. But the more you ignore it, the more you lose control over your financial life. So, it is better to value your financial problems to ensure a secure financial future. If you are unable to simplify your finances, then talk to a financial advisor as soon as possible. There is no harm in taking an expert’s help. The expert can help you to understand how you can simplify your finances easily.
