Americans spend about 2.6 hours per week managing money, according to research conducted by GoBankingRates. Unfortunately, despite the fact that we spend lots of time on financial tasks, most of us still report feeling stressed about money at least some of the time — and close to one-third of Americans report feeling stressed about money all the time.
Handling your finances sometimes seems like a full-time job with high pressure and high stakes. But it doesn’t have to feel this way forever. There are some ways you can simplify your financial life so you spend less time worrying and less time handling your cash. If this sounds appealing to you, here are four steps to take today to get things under control.
1. Consolidate Your Accounts
Up until last year, my husband and I had five or six different brokerage accounts, multiple checking accounts, some old 401(k)s, and a whole bunch of credit cards. Keeping track of all this took forever. Checking our balances meant logging into multiple online services; diversifying our investments was tricky since it was hard to keep track of what was in which portfolio; and we never knew which credit card would give us the most rewards for which purchase. Oh, and we had to remember to pay all those different credit card bills too.
Finally, we wised up. We moved all our investment accounts to one broker, scaled down to just one checking account and a few high-yield savings accounts for different goals, rolled over the old 401(k)s, and picked one great credit card that provided tons of cash back. Now keeping track of our accounts is effortless, as we only have a few to monitor and they’re almost all with one financial institution.
If you’ve got tons of different accounts, there’s likely little reason to keep them all open. While you may not want to close all your credit cards — as doing so could hurt your credit — it makes life a lot simpler to just pick one great card with generous rewards for spending you do the most. And many brokerages and banks reward you for having multiple accounts with them or for having a high balance across different accounts, so consolidating could help you score some added perks too. We get a boost on our credit card cash back, waived stock trade commissions, free checking, and a whole bunch of other benefits since we now have all our accounts with one institution.
2. Deal With Your Debt
If you’re in debt, your financial life is always going to be complicated — so make a plan to pay off what you owe as soon as you can. While paying mortgages and student loan debt off early doesn’t necessarily make sense because these debts usually have low interest rates and come with tax breaks, getting rid of all other consumer debt is the best thing you can do for your finances. Not only will you free up more cash for other things, but you’ll also have fewer payments to worry about and won’t have to work debt repayment into your budget.
It will take time to pay off debt, but be as aggressive as you can in becoming debt free ASAP. You may even want to think about picking up a side gig until you’ve paid off what you owe so you can throw more money at the problem. Since it can still take months or years to become debt free, think about consolidating and refinancing debt. If you can get a new personal loan to pay off all your credit cards and other consumer debt, you may be able to reduce the interest rate you’re paying and simplify your life to just one loan payment to keep track of.
3. Set the Right Types of Financial Goals
To make money management easy, you’ll need a clear idea of what to do with your cash so you don’t have to think about where it should go. Setting financial goals will guide you, but it’s important to set the right kinds of goals. You don’t want to strive to do too many things at once, and you don’t want goals to be so vague you don’t know what to do.
To set successful financial goals, make them specific, give yourself a deadline for achieving them and track your progress. For example, “saving up a down payment” is a bad goal because you won’t know how much to save to achieve it. Instead, if you want to buy a house in three years and need a $40,000 down payment, your goal should be to save $1,111 per month so you have the cash you need by your desired purchase date.
If you have very detailed goals, you can easily track progress — and easily do the next step on our list of tasks to simplify your money management.
4. Automate Your Payments and Investments
This step is the most important of all if you want to make managing money easy. It involves making your money do the right thing automatically.
You’ll want to automate as much as humanly possible so your financial management needs very limited human intervention. Set up autopay for all of your credit cards, utility bills, and mortgage payment or rent. You can choose to set up an automatic payment to pay off your balance in full or to pay a desired amount toward debt repayment — which is ideally more than the minimum. You should also set up an automatic transfer of money to savings each payday. You can allocate cash to go to your emergency fund, other savings accounts for other goals, and a retirement account.
If you automate your payments and investments, you won’t have to think about what you’re doing with your money. And you won’t necessarily have to live on a detailed budget either. You’ll have to do the math at the beginning to make sure you have enough money to cover all the automatic payments and transfers you’re making. But once you know you’ve got the cash, you can just live on anything left over in your bank account after automatic payments are taken out.
We’ve had all of our investments and payments automated for years, so I never have to worry about whether I can make a splurge purchase or not — if the cash is in my checking account, I know it’s mine to do whatever I want with since the bills are paid and I’m making progress toward my goals.
You Can Make Money Management Easier
By consolidating your accounts, being proactive about what you owe, setting clear goals and automating your financial processes, you can reduce the time you spend managing money and can increase the chances of financial success. It may take a little time to put your plans in place and get better at handling your finances — but once you’ve got everything on autopilot, your financial life will be a lot easier. You’ll be on track to build your net worth and can spend your time enjoying life instead of worrying about money management.
The views of the author of this article do not necessarily represent the views of Gradifi. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained here. Readers should consult their own attorneys or other tax or financial advisors to understand the tax, financial and legal consequences of any strategies mentioned in this article.