I was talking with one of my friends regarding her personal finances. She is currently using the Snowball Method to pay off debt, working on her budget and saving for her emergency fund.
As we were talking she started to discuss some of the processes surrounding her strategy. Although she is well on her way to improving her overall financial position, there were times when she would get frustrated. And feel down like she wasn’t making any progress. Problems like; bill pay applications not working, managing multiple accounts, or sometimes just the sheer process of paying the bills. A reminder of the debt she is trying to pay off.
Regardless of what strategy or method you use to save money and pay off debt, defining a strategy is one thing, actually implementing it can be another.
- Are you working on your personal finances to help improve your financial position?
- Do you feel like you’re always budgeting, paying a bill, trying to figure out how much to save?
- Does it feel like you spend the whole month thinking and stressing about your money?
If so, you’re not alone. Improving your financial situation takes time, focus and consistency. Regardless of your strategy at times it can seem daunting – the proverbial two steps forward, one step back.
Out of Sight Out of Mind
If you feel like you’re constantly working on your personal finances, then it may be time to take a different approach. Being able to work toward your financial goal with the least amount of effort and still reach them is what I call “creating the perfect financial storm”. When your debt, saving and budget processes become so easy, they no longer create stress or anxiety in your life.
- 11 Reasons to Save Money and Pay Off Debt
- The Time Value of Opportunity – Saving Money and Making More Money
Here are three ways you can simplify your personal finances, minimize your workload, and still achieve success.
Minimize the Clutter
Every checking, savings, loan and credit card account generate some form of information, either in paper or electronic form. Reviewing, storing and managing multiple forms of information arriving at different times of the month can not only be a battle, but a nuisance.
To better manage and minimize the amount of information you get, start by minimizing the number of accounts you have.
- One savings account
- One checking account
- One credit card account. (after all your paying these off anyways)
In addition, if you also bank at more than one financial institution, consider reducing the number of institutions to just one. Then take it one step further and minimize the delivery method from which you receive the information from those accounts.
Most financial institutions have an online method of receiving your statements. Eliminate the hard-copies and move to electronic delivery – have them delivered via email. Use your email system as your document “file cabinet” for when you need to review your statements.
And finally, be sure you tell your financial institution you’re not interested in any of their marketing material, either by email or by paper. Most institutions have a method of allowing you to opt out of these forms of communication. Check with them to see if you can limit the information they send you either via email or postal carrier.
If you can minimize the number of accounts you manage and then limit the information provided by these accounts, then you’re a step closer to simplifying your processes. You will find that in this case, less information is actually better.
- How Many Credit Cards Should You Have?
- What’s Not Important When Paying Off Debt
- How to Stop Procrastinating and Get Out of Debt
Pay Your Bills Once a Month
How many times do you pay your bills during the month? Do you wait until each bill is due and then write the check? Mortgage on the 5th, cable on the 15th, electric on the 20th…
If this is currently your environment then you’re spending way too much time on your bills, and creating a whole bunch of stress and anxiety each time you do it. Seriously, who wants to be reminded four, five or six times a month that they have to spend more money. Simplify!
Start by paying your bills once a month.
I typically wait until I receive all my bills either electronically, or in the mail and then sit down once per month to “write the check”
If you pay your bills on line, schedule your payments accordingly based on when they are due. If you manually write checks, write the checks and if needed hold them until they need to get mailed. Of course both processes assume you have an understanding of what you will need for funds to cover each bill by their due date.
Paying your bills once a month can be a bit of a mind shift, however if you can make the change, you will only have to pay bills once, and then not worry about them for another 30 days. This is a sure fire way of getting out of the day-to-day or weekly cycle of feeling like your always paying your bills.
Pay Me Now, Pay Me Later – or just Pay Me
One of the most successful ways of growing your savings account is to set up an environment where you’re consistently saving money and you don’t even think about it.
Direct deposit can create that type of environment. Depositing directly into your savings account removes the process of going to the bank, or transferring money back and forth between your checking and savings account.
When you set up direct deposit for your savings account, regardless of whether its $10, $25, $100 or even $200 per pay period you’re not only paying yourself first, but your also creating an environment that is less favorable to you spending the money your trying to save.
It also creates a situation where the remaining money you have in your checking for expenses is easier to manage. What begins to happen is rather than trying to figure out how much to save every pay period, after direct deposit you’re left with – what’s left. The process of what to save is removed, because you already made the decision on what to save.
If you’re not using direct deposit as a strategy to save, try it. Regardless of how much you initially direct deposit, you will be surprised at how quickly you can save money and not even think about it.
From a FTP perspective: strategies for getting out of debt and saving money are only as effective as the procedures used to implement them. The more complex they are the less likely they are to succeed. From this perspective less is more. Re-think your processes, simplify, and create your own “perfect storm” for financial success.
How Do You Simplify Your Personal Finances? Comment Below.