How can I make my financial life better? How do I become financially minimalist? These are excellent questions if you’re interested in learning how to simplify your financial life.
We all know that managing your financial life can be overwhelming.
Between saving for retirement, paying bills, managing your debt, saving for things in life you want, and so much more, your finances can take up a lot of your time and brain power.
Due to this, I think it’s a great idea to learn how to simplify your financial life so you can have less stress and spend more time on the things you truly enjoy doing.
Taking a minimalist approach to personal finance will mean different things to different people. Some people will want to get out of debt, while others simply want to create a better process for paying their bills.
Overall, learning how to simplify your financial life means you are reducing financial clutter.
The benefit is that you don’t feel so bogged down by money. Maybe it’s stress related to debt, being unable to keep track of when your bills are due, forgetting to actually pay bills, etc.
Money is something we all need to live, but money can be a huge stressor. Fortunately, there are ways to organize and simplify your finances so that you can reduce stress and stay on top of your money.
Of course, not every action on the list below will apply to everyone. It’s all about finding what works for you – remember, personal finance is personal, and we all make different choices.
My hope with this post is that everyone reading will be able to find a couple of tips that they can immediately apply to their financial life.
As you begin to take control and simplify different aspects of your financial life, you may find that it gives you the confidence and skills needed to make even larger changes. That could be paying off debt, starting a side hustle, preparing for retirement, and so on.
Many of the ideas on this list are ones I use to organize my life and finances, and I can tell you that I would be so overwhelmed without them. Surprisingly, the ones that help me the most, like setting reminders, are the easiest to get started with.
Now that you understand why it’s important to simplify money stressors, let’s get started!
12 tips for how to simplify your financial life
1. Get rid of your debt
This is one of the most difficult steps to learning how to simplify your financial life, but it can have a huge impact.
Whether you have student loan debt, credit card debt, car debt, or whatever else, paying it off will make managing your finances easier as you will have less debt to stress about.
When thinking about all the mental clutter we have, debt can be a huge contributor to that clutter. Debt can cause a crazy amount of stress, and eliminating your debt has endless benefits. Paying off your debt will lead to reduced expenses, and that means you can set more aside for your long-term financial goals, like through investing or saving for retirement.
2. Slim down the amount of credit cards you have
Okay, so I understand that this is a hard one if you like to take advantage of credit card rewards – I know I do!
If you are not interested in credit card rewards, then slimming down to just one or two credit cards can save a lot of hassle and time.
By having less credit cards, this means that you’ll have fewer credit cards to keep track of and fewer credit card bills to pay.
3. Organize your finances
Most Americans are managing many different accounts on a daily or weekly basis, from checking accounts, savings accounts, credit cards, student loans, their mortgage, car loans, etc.
One of the most helpful things you can do if you want to learn how to simplify your financial life is to start using a platform like Personal Capital.
Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation. You can connect accounts, such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more.
And, it’s free!
Personal Capital makes it easy to see your whole financial picture with just one login. This is great because you can use their website to get a quick and easy snapshot of your financial situation.
4. Have less clothing options
This may not sound like a tip for learning how to simplify your financial life, but some of the most successful and wealthy people out there have a very limited set of clothing options. That’s because they realize this isn’t a place to devote time and energy.
By having a smaller wardrobe, you’ll have more time to focus on other things in life, and this can help you to save time and possibly even money. You’ll spend less time getting ready in the morning and less time shopping too.
You can start by looking at the items you wear the most and get rid of the one you haven’t worn in months. It can feel really good to clean out your closet! You can then start to build your wardrobe around the items you know you love and will wear more often.
5. Pay expenses annually or semiannually
There are some bills that you have to pay each and every month, but you may be able to eliminate some recurring bills, either by paying them annually or semiannually.
You can pay bills like car and homeowners insurance every six months or once a year, and you will probably qualify for a discount for setting up this type of payment option.
If you switch from monthly payments for just two bills, that’s two less to worry about each month!
You will probably have to adjust your monthly and yearly budget to do so, but looking at and adjusting your budget is always a good thing to do anyway.
Plus, many companies, such as home and car insurance, will give you a discount if you pay in advance.
6. Automate your income, bills, and payments
Automating my bills saves me so much time, and I’ve been able to eliminate a bunch of reminders because my bills basically pay themselves.
This is one tip that you can implement in your life in just a couple of hours (or less), and automating your payments gets rid of a lot of financial clutter.
Plus, your monthly bills are probably somewhat similar from month to month, so you can easily see if something seems incorrect.
Here are some ways to automate your bills:
- Direct deposit your paychecks
- Auto pay your monthly bills (such as electricity, gas, water, sewer, internet)
- Auto pay your monthly credit card payments
Even though I check through all transactions and expenses, I still automate many of my actual payments so that I never have to worry about forgetting anything. Most of my expenses are similar from month to month, so I can usually just check the payment to see if everything is correct.
7. Start a cash budget
Setting up a cash budget is an excellent idea if you are struggling with credit card debt or want to be more strict with your spending.
A cash budget is when you pay for the majority of your purchases in cash. Of course, there are certain expenses that don’t allow for cash payments, such as a mortgage payment. But, the idea is to pay for as much as possible with cash.
Many people like having a cash budget because it can help them easily see how much money they have to spend in different categories each month, instead of doing calculations throughout the month and tallying everything up at the end.
You’re also learning how to simplify your financial life because there aren’t credit card payments, balancing your checkbook, or making sure your debit purchases match what’s in your account.
8. Invest in funds
One way to simplify investing is to invest in funds, instead of individual stocks.
When investing in individual stocks, you probably spend a lot of time researching and tracking individual companies for each stock you add to your portfolio. You also have to spend time making sure your portfolio stays balanced and aligned with your long-term goals.
However, funds are much simpler and can keep you more diversified. It’s a way to learn how to simplify your financial life while helping you develop a healthy investment strategy.
Remember, investing is important because it means you are making your money work for you. If you weren’t investing, your money would just be sitting there and not earning a thing. Plus, the earlier you start investing, the more you’ll end up earning because investing is long-term financial planning.
You can learn more at How To Start Investing For Beginners With Little Money.
9. Place reminders on your calendar
I have a ton of reminders on my phone’s calendar because I have a horrible memory. I highly recommend this if you want to learn how to simplify your financial life because reminders are so easy to set up!
I know this first hand because if there is something coming up that I know I will not remember, I will create a reminder. This makes managing my life easier because I don’t have to worry about forgetting things, missing payments, and so on.
Here are some of the reminders I create:
- When it’s time to pay estimated quarterly tax payments
- Renewing license plate tags for our cars
- Paying semiannual bills, such as car insurance
- Business tasks and to-do lists
You can use your phone to remind you about all sorts of things, like when it’s time to pay bills, take medications, bring back library books, call a friend, and more.
10. Create an emergency binder
Creating an emergency binder organizes all of your family’s information in one place. It makes finding any piece of information quick and easy, and you’ll probably refer to it often.
An emergency binder is a way to store financial information, like bank account numbers and passwords. You can store insurance information, personal details about you and each member of your family, information about bills, and more.
This helps to simplify your finances because you’ll have everything in one easy to find place, instead of having to search multiple places for information. Plus, if something were to happen to the person who is mainly in charge of a household’s finances, it makes it much easier for the next person to take control.
I know there are many, many families who would be very lost if something were to happen to the person who usually manages their financial situation.
Accounts could get lost, passwords would be unknown, bills may be forgotten about, life insurance documents may be difficult to find, and more.
It’s best to keep a family emergency binder just in case something were to happen, even if it’s something no one ever wants to think about. Having one just makes life so much easier, and it’s one of the smart money moves you should make this year.
I recommend checking out the In Case of Emergency Binder if you want to learn how to simplify your financial life and organize it for future situations. This is a 100+ page fillable PDF workbook. The In Case of Emergency Binder was created to remove significant complications from the process and help you actually get your important information ready.
11. Skip the paper bills
Paper bills can lead to a lot of physical clutter in your home. If you can, I recommend switching to online billing and getting notifications to your phone and/or email inbox.
An added benefit is that many companies will give you a small discount when you decide to go paperless on your monthly bills.
12. Cut expenses out of your life
Think about how many different expenses you have in your life. There’s groceries, your mortgage or rent, car payments, medical insurance, car insurance, cell phone bill, credit card bills, childcare, streaming services, cable, internet service, and more.
While you can’t cut out all of those expenses, there may be at least a couple you can work to eliminate all together.
If you want to learn how to simplify your financial life, you may want to look at various expenses in your life, such as monthly subscriptions that you may pay for and cancel ones you don’t need.
How to simplify your financial life – Summary
There are many ways to simplify your financial life. By doing so, you may be able to lower your stress and even save money.
As a quick recap, some ways to simplify your financial life include:
- Get rid of your debt
- Slim down the amount of credit cards you have
- Organize your finances
- Pay expenses annually or semiannually
- Have less clothing options
- Automate your payments
- Start a cash budget
- Invest in funds
- Place reminders on your calendar
- Create an emergency binder
- Skip the paper bills
- Cut expenses
What do you do to simplify your financial life? Do you think that managing your finances is easy or difficult?
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