I do love the art of minimalism. Minimalism is an approach that assumes less is more, or to simplify. Sometimes it can be really hard to implement in different areas of our lives. Especially with our finances.
I think we all envision a world where money is simplified. Where our bills are paid, savings is applied automatically and financial perks are generously applied; however, there are endless options for credit cards, bank accounts, saving, organizing and yes, investments. It can be really overwhelming. Many of us have more than one option when it comes to these financial services. Making it less than minimal and simple.
How then do you simplify your finances in a world that gives you so many choices? I'm glad you asked. I'll give you my financial minimalist approach.
1. Cash. Yep, cash is king. Using cash to make purchases is really simple. You don't have anything to sign at the register. Plus, you don't get a statement every month. If you pay with cash, there's no worries about overdraft, pin numbers or interest. What could be simpler?
2. Use only two credit cards. If you like using credit cards, then consider cutting those down to just two. One for everyday purchases and a second that has low interest when you have to carry a balance. You really don't need all those gas and department store cards. They all take these major cards. I love my American Express card because I pay the balance in full every month.
3. Automate. Let's start with direct deposit. I love this. My check is there on payday. No lines, no deposit and no bank holds. It's just there. You can also set up auto payment of your bills. This works great with recurring bills like your mortgage or car payment. You can automate your savings, too. Online banking allows you to transfer a set amount to transfer to savings every month. Voila! You are living a more simplified financial life.
4. Batch bill pay. Aside from a few bills that come in later in the month, I pay all my bills once per month. Why? I never really have to worry about due dates and it's much simpler. You get it over with. You also don't feel as though you are constantly paying bills.
5. Choose one financial institution. I've always had a hard time with this one too. I love my local credit union. I also love USAA, too. I've found a way to use both over the years for different things. If you really want to simplify your finances then just use one financial institution. There are added benefits other than simplicity too. When you consolidate these accounts you might be able to get better deals with credit and loans.
6. Go paperless. I resisted the whole paperless thing for a long time. I always worried that I would need that one piece of paper that I didn't keep! With tools like Evernote and Filethis, going paperless is really easy and efficient. Now I can search for any statement without going to a dozen different websites. Another couple of benefits of paperless is that it takes up less space and it's better for the environment.
7. Consolidate debt. If you have debt then try to have as few accounts as possible. Don't use the high interest debt consolidation loans! Try to use a reasonable zero interest credit card offer to consolidate. Just make after the offer expires that you aren't paying loan shark rates!
8. Consolidate investments and investment accounts. Think about having one account with a good advisor. Pick the advisor you have a good relationship with and move more money to him or her. This helps with getting lower fees and with less paperwork. Fewer statements and one consolidated 1099 at tax time. Once you have consolidated your accounts, consider fewer investments. Don't sacrifice diversification though! One good balanced account or target retirement date account will get the job done.
These suggestions are just a start. Implement them all or just a few to get your finances simplified. Click here to subscribe to these articles for free!