How to Simplify Your Financial Life


We’re entering a new year and decade, and many people use this change of season as a kick-off point to organize their finances. Unfortunately, when people dive into creating a plan, they put too many systems in place, and overcomplicate their money. It’s tempting to download every app, try an overly strict budget, or force yourself to sit down every day to review your spending.

The more hoops you push yourself to jump through the less likely you are to stick with your plan and accomplish your goals. That’s why it’s key to find ways to simplify your financial life.

The less energy and effort you have to put into keeping your finances on track, the more likely you are to find success and reach your goals. Not sure where to start? Let’s go over a few easy ways to start simplifying your financial life during this new year.

Get Organized

It’s one of the number one recommendations for simplifying your finances for a reason! Too often people have piles of financial statements, insurance documents, loan and mortgage paperwork, and more odds and ends information tucked away somewhere in their filing cabinet. Then, when it comes time to file their taxes or organize a financial plan, they’re completely overwhelmed by the task of finding the information they need. Here are a few tips to get started organizing your financial information to streamline and simplify:

1. Go digital

If you can, create a secure, digital “home” for all of your financial information. Upload key documents to a secure folder (think: Dropbox, Google Drive, Box, etc.), and switch all of your financial statements to digital to save paper (and filing cabinet space).

2. Store your passwords

Once you create a digital “home” for your financial information, you can save a document there that contains critical financial passwords for ease of access. Alternatively, consider a secure service like LastPass or Dashlane to save your digital passwords in one place.

3. Shred old documents

It’s nerve wracking to get rid of financial paperwork, because you’re never sure when you might need it again. Here are a few good rules of thumb:

a. Keep tax paperwork (proof of income, deductions, receipts) until each filing season – and then save copies with your return.
b. Keep tax returns for up to 3 years after filing (per the IRS).
c. Create and keep a separate file for important permanent records (marriage and birth certificates, Social Security cards, etc.)
d. Scan bills and financial statements to store them digitally, or request for them to be delivered to you via email for easy storage and access.
e. If you have financial statements for an asset you own, keep them as long as you own the asset (cars, home, etc.)

4. Automate money dates

Have you and your partner ever set aside regularly scheduled time to look at your finances and evaluate your financial life? Money dates are a key component to a healthy financial relationship! Set an automated calendar reminder to meet monthly or quarterly, and outline an agenda ahead of time so you always know what you’re reviewing. For example, reviewing your budget, progress toward savings and debt repayment goals, and any financial changes (like increased salary or unexpected costs) are all good, recurring items to discuss.

5. Update your beneficiaries

This sounds small, but so many people put off updating their beneficiaries! Take the time to go through your retirement accounts, life insurance, and any other assets you have to ensure the correct beneficiary is listed.

Look at Consolidating Your Loans

Are you tracking a laundry list of loan payments every month? More often than not, when individuals graduate college, they have at least a few different student loans for various semesters and study abroad trips. Then, as you move through adulthood, you may accrue other loans.

One way you can consider simplifying your finances is by consolidating your loans and refinancing where applicable. Consolidating private student loans into one loan could help lock in a lower interest rate. This could minimize the number of loans you need to keep track of.

Streamline Your Budget

Raise your hand if you have ever started a budget, only to fall off the bandwagon because it felt too time-consuming.

We’ve all been there!

The truth is that budgeting doesn’t have to be as complicated as people often make it. Having an overly strict budget can feel suffocating. Categorizing expenses into 25 different sections, tracking every line item daily, and weighing each purchase against an app on your phone is exhausting.

What you may not realize is that a strict budget doesn’t actually guarantee that you’ll move closer to your goals. In fact, the more you restrict yourself, the more likely you are to burn out and swing in the other direction – making big, unplanned purchases that completely blow your budget.

Instead of creating a strict and tough-to-follow budget, try streamlining. Start by determining your big-picture goals and reverse engineering how much you need to save, put toward your debt, and spend in order to achieve those goals.

For example, you may want to save toward retirement through your workplace 401(k), contribute toward a 529 Plan for your kids, pay off your student loans, and save for a house downpayment.

With these goalposts in mind, you can determine how much you need to save or funnel toward your student loans. Then, you can divide the leftover cash flow toward necessary expenses like mortgage or rent and lifestyle-focused categories. These could includel travel, experiences with family and friends, or grabbing a latte before work.

Focus on One Goal at a Time

The biggest problem people run into when it comes to building a financial plan is that there are so many goals to pursue. It can be hard to focus and one goal for long enough to see any progress.

You might even find yourself “goal hopping” as you enter different seasons of life. This can leave you feeling frustrated and like you’re treading water.

Although it’s not possible to solely focus on one goal at a time, you can do your best to single out what goals are most important to you and zero in on the ways you can move the needle.

For example, you might want to save toward retirement, pay off your student loan debt, and prioritize travel for you and your family. You could automate saving toward retirement and your monthly loan payments. Then, you could put extra cash flow toward a savings account earmarked for travel.

The key here is, once you’ve decided the handful of goals that are most important to you, stay focused. Don’t allow yourself to get distracted, and dedicate your financial decisions to working toward those goals whenever possible.

Set Up Automated Bill Pay and Contributions

Are you still manually paying your bills every month? Save yourself both time and brainpower by setting up automated bill pay everywhere you can. If you’ve budgeted for your expenses correctly, there should always be more than enough money in your account to pay your bills. Automating your bills helps you to take one more financial “to do” off of your list. Additionally, automatic bill pay often comes with discounted payments for some services.

Another added benefit is that automatic bill pay takes the human element out of getting your bills done each month. Let’s face it, we all have busy months when paying the bills falls to the bottom of the list. Eventually, if you’re manually paying everything, you’re more likely to slip up and miss a bill. Take the stress out of the equation with automation.

Ready to take your automation to the next level?

Try automating your financial goals, as well. The two most popular goals to automate are savings and debt repayment. To automate your savings, you can:

1. Automate contributions to your workplace retirement plan.
2. Set up direct deposits to your savings account to help you reach short-term savings goals.
3. Create automatic monthly or quarterly deposits to any 529 Plans, Donor Advised Funds or IRAs you’re funding.
4. Schedule overpayments on your mortgage in advance.

Automating debt repayment is a little more straightforward, but just as important. You can start by automating your monthly bill payments. Then, if your goal is to pay your debt off more quickly, you can set your monthly payment to be higher than what you owe.

Taking the human element out of bill payment helps you to pay your bills on time, and the concept applies to automating your financial goals. If you’re saving and paying your debt off each month automatically and only spending the cash leftover, you’re more likely to accomplish them. However, if you are forcing yourself to manually save or pay extra toward your loans, you’re more likely to skip a month when it’s less convenient. Consistency is key when it comes to financial success, and automation helps you stay on track.

Evaluate Your Insurance Coverage

When was the last time you took a closer look at your insurance coverage? Evaluating your health, life, home, and auto insurance should be on your financial to-do list at least once a year. You want to make sure that your coverage is still meeting all of your lifestyle needs, and that you aren’t overinsured, either. Health and life insurance are likely relatively straightforward and can be reviewed through your employer during open enrollment.

Choosing the right home and auto insurance, however, may take a little more research. You may find that shopping around for lower rates periodically and being willing to move all of your coverage under one provider might save you a notable amount of money every year. Taking the time to do a bit of research at least annually helps you to ensure you’re getting the most bang for your buck when it comes to the coverage you need to protect your wealth.

Get Your Financial Team in Place

Working with a CPA, an estate planning attorney, and a financial planner can help you take your financial life from good to great. Even if you’re consistently moving toward your goals, having a team of experts in your corner can open you up to other financial opportunities you may not have seen on your own. Additionally, outsourcing your wealth management and taxes can free up your time and ensure that you’re getting the most out of your money.

Have questions about working with a financial planner? Want to know more about how you can start simplifying your financial life? Contact us today! We’d love to chat with you about your financial goals, and how you can streamline your money to help you live your best life.

Mary Beth Storjohann, CFP® is an author, speaker, and financial coach who takes a fun, no-nonsense approach in working with individuals and couples across the country, helping them make smart choices with their money.

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