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10 Easy Ways To Simplify Your Finances

I’ve been on a simplicity kick for a while. To give you an example: My wallet now consists of my ID and three other cards wrapped up in a rubber band. My key chain holds my house key and my car key—that’s it. I’m just tired of wasting time with extraneous “stuff”. The way I see it, the 80/20 rule can applies to everything. We use 20 percent of our things 80 percent of the time; 80 percent of our stuff 20 percent of the time. Why not whittle down to the 20 percent and learn to live without the rest? The same holds true with how much time I spend on my finances. Here are a few easy ways I simplify my finances. Give them a try and let me know how they work!

1. Use a Checkbook Register. Remember those little booklets that come with boxes of checks? I still use one! I use a checkbook register to track every debit card purchase, every deposit, every check. Since I started doing this, I’ve never had to worry about overdrafts—I’ve always known exactly how much was in my checking account. I don’t actually carry around the check register everywhere I go, but I leave it at home or in my suitcase if I’m traveling and I update it with my receipts once a day.

2. Make Your Budget with a Spreadsheet. I used to budget on pen and paper too, but I found it was a lot easier to let a spreadsheet like Microsoft Excel do the math for me. That’s why I created my original budget spreadsheet. Recently, I created a really simple budget worksheet that simplifies the monthly budget even further by grouping categories of expenses. Don’t get me wrong, I love—and use—fancy budgeting tools like Quicken and Mint.com from time to time, but I find they can’t replace the simplicity of a good spreadsheet.

3. Limit Yourself to One or Two Credit Cards. I’m still whittling away at some old debts, so I have more credit cards on my credit report than I’d like. But I’m down to using just two (that I pay-in-full every month, of course). One is a joint card that my wife and I use for groceries and recurring monthly bills; the other I use for personal expenses like gas, gifts, etc. Perhaps someday I’ll ditch the personal card all together and just use cash, but I really like the way credit card statements organize your purchases, so we’ll see.

4. Use Automatic Bill Pay. I don’t think I write a single check for a monthly bill anymore. I simply set up bill pay through my checking account and forget about it (except when it’s time to update my checkbook register, of course). I have these bills set up so that my bank pays the billers (rather than authorizing the biller to withdraw money from my account). Call me crazy, but I just don’t want to give anybody carte blanche access to my checking account.

5. Invest in Index Funds. Feel free to prove me wrong, but I open up Yahoo! Finance or listen to Jim Cramer, and I say, who in hell—other than handsomely-paid hedge fund managers—actually buys this stuff? When half of professional money managers can’t beat the stock market, why are individual investors even trying? My retirement accounts are in index funds. Done and done.

6. Say ‘No’ to Loyalty Programs. The other night, my wife was horrified that I threw out a junk-mail envelope containing a $10 off coupon for a shoe store. She’s right, coupons are good, but only when they’re for things you need to buy. Trouble is, most store loyalty programs plaster us with coupons that expire next week for items we rarely need today! I have too many pairs of shoes already. The way I see it, if I saved $10 on a $50 pair of shoes, I still spent $40 I didn’t need to. So I’m opting out of any programs that reward spending with incentives to spend more. That just doesn’t add up. Plus, I don’t want anything else on my key chain!

7. Pay Yourself First. This has to be one of my favorite personal finance concepts, and if you’re not doing it, you need to start: Pay yourself first! Whenever you get paid, transfer money to savings (or to debt if you’re digging out) before you pay anybody else. That way, you’ll never have to worry about spending money you should have saved.

8. Avoid Advertising. Advertising compels us to buy stuff we otherwise don’t want or need. Even if we’re consciously trying to ignore ads and live frugally, corporations pay ad wizards huge bucks to brainwash us. I don’t pretend I’m special and can just “tune out” their never-ending barrage of “buy-me” messages. Therefore, I try to limit how much TV I watch, and I’ve stopped reading magazines (except on long flights or in doctor’s offices). The fewer ads I see, the less I’m even tempted to think: “Ooo, I want that!”

9. Buy Only What You Need, When You Need It. This may seem at odds with the lessons of frugality freaks who stock up on certain items when they’re on sale, but I prefer to buy only the groceries I need for a couple of days. This way I’m less tempted to buy things I won’t eat quickly, and I waste less. If there’s a good price on something that keeps for a long time—say tuna fish or canned vegetables—I might be inclined to buy two weeks’ worth instead of two days’ worth, but that’s about it. This strategy also makes it easier to incorporate more vegetables in my diet, since I’m at the store every couple of days and can buy produce and consume it while it’s fresh.

10. Pair Up! I admit, before my wife and I got married (a month ago today), I was skeptical about combining finances. Although it will be a while before our finances are more combined than not, there’s a great sense of pleasure—and simplicity—that comes from combining things like our emergency fund and car insurance. But you don’t have to get married to enjoy the benefits of sharing expenses. Things are so much more affordable when you split them with somebody, be it a spouse, partner, or roommate. (Though I wouldn’t’ recommend you commingle funds with a roommate you met on Craigslist!)

What do you think? Do you follow any of these strategies to simplify your finances? Disagree with any? Have other strategies? Please share! For even more ways to simplify your money, check out Man vs. Debt’s 43 Ways to Radically Simplify Your Financial Life or ZenHabits’ 20 Money Hacks: Tips and Tricks to Improve Your Finances.

About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. I really like the idea of applying Pareto’s Law (80/20) to things we use! That must be so true. Gives me an idea to return to when I go through my next decluttering. One or two credit cards is also a principle that works for me. If you have a MC and a VISA, there isn’t anywhere, generally, you won’t be able to use one. More than that is problematic, I think.

  2. David Weliver says:

    Yeah, I’m having a blast applying Pareto’s Law to my stuff. I’m in the process of doing it to my wardrobe too (donating the 80 percent of clothes I wear 20 percent of the time; it feels great!)

    As for credit cards, I used to use an AMEX charge card (cause it *had* to be paid in full every month), but I’m going to cancel it and will stick with a MC for that reason—there’s nowhere I won’t be able to use it.

  3. I agree 100% about using a budget on Excel, but I think that the Excel version of a check register would be beneficial…much more so than the old paper version.

  4. Really great tips – I’m a huge fan of index funds and financial automation (paying yourself automatically & online bill pay). Instead of a credit card (or going to cash, as you’re considering), why not a debit card – especially one that gives you rewards comparable to a credit card? It will provide the spending control of cash without sacrificing credit card benefits.

    [Disclosure: I work at PerkStreet, where we are launching a debit card with superior rewards in a few weeks]

  5. David Weliver says:

    John, I’ll be watching your product and others like it with interest. My bank is rolling out a new debt card with rewards this fall, and it may get me to start using credit cards less and debit cards more.

    The two big reasons I don’t use my debit card exclusively are:

    1. The bank debit cards I’ve used don’t break down purchases by date and category as well as credit card statements. (The transactions are in my bank statements, but not as neatly).

    2. (And this is perhaps a bigger deal) Fraud protection. Most banks won’t hold you liable for fraudulent debit card use if you report it quickly, but any money thieves access comes out of your bank account. And that money is gone until the bank returns it.

    Both my parents and brother had their debit cards hacked several times in one year and had their bank accounts *drained*. They got the money back, but only after several days of correspondence with their bank. That’s something I want to try and avoid.

  6. “Make Your Budget with a Spreadsheet” is a good start but now there are tons of online and offline software that help and monitor your budget.

  7. Good article! I have not used a check register for years. It’s all on line now and with debit cards the money comes out instantly. Budget on a spreadsheet is a must!Cut up the credit cards unless you like paying 19% interest every month and being a slave to the creditor. On line bill pay is great and very easy and simple. The rest of the ten are great!

  8. Nice post. #1 is a must. You have to keep your checking account balance in order. Those debits are the ones you forget and can cause your account to be overdraft if you don’t have alert or other things in place to prevent overdrafts.

  9. For me, I use a spreadsheet to do the household budget. With this, I can see where and how many my money has gone. So I can cut expenses for superfluous stuff such as personal shopping and meals. I agree with you on my saving measures: using a checkbook register, and less credit card. I myself now use only one credit card.

  10. Great article I am in banking and it amazes me the number of people who do not balance their account or keep a check register. They are ones who bounces checks on a regular basis. I cannot stomach the thought of paying NSF fees which are completely avoidable if you keep your records straight. People please go by what you have and not the ATM it does not know what checks you have written.

  11. mmm… 80/20 principle I live my life by that! Good tips!

    I also went paperless. Scan to PDF, encrypt, & shred the paper. It’s less stuff to have around since i move a lot. A side benefit is that my SSN isn’t on paper documents anywhere around the house. So if, God forbid, my home is ever broken into, I’m safe from identity theft at least. :)

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