How do you make your finances just a little bit easier on yourself? In this post, Clo Bare gives us five tips to make finances easy, peasy.
Believe it or not, I spend about an hour a month on my finances.
Does that surprise you?
It’s because I’ve designed a system that is easy and low maintenance— two things I require in pretty much every aspect in my life.
I’m a big believer in that we do what’s easy, so if we see our financial systems as a complicated and confusing web of actions?
Then likely, we won’t actually do it.
That’s why it’s so important to simplify. So, in this week’s post, let’s talk about a few ways to simplify your finances.
How to Make Your Finances Easy On Yourself
1) Automate, automate, automate
When it comes to saving, investing, debt payoff, and bill pay? We can automate almost every step in these processes either through our bank accounts or through the services we use.
Make sure your bill pays are on autopay. That way, you’ll never miss a payment, the money will just automatically come out of your account.
Sometimes companies will even offer a discount to get you to set up automated bill pay.
If your bill provider doesn’t have automatic payments, you can also look into bill pay through your bank or credit card, where your bank/credit card will automatically send money to the creditor or service provider.
Automate Credit Cards
Make sure you’ve got automatic payments turned on! This is SO important because if you miss a payment?
Your credit score will get dinged, and get dinged hard.
We do not want to ever miss a credit card payment. I pay my credit cards off every month, but I make sure I have auto-pay on just in case I forget to wipe them out in time.
Automate Student Loan Payments
I’m guessing MOST people already have their student loans set up on autopay through their provider, but if not?
Make sure you do. Easy win to make sure you never forget a payment.
Automate Your Savings
Did you know you can also set up automatic savings?? I love this because sometimes we need to treat our savings goals just like a bill to make them happen.
Most banks offer some type of automated savings that you can set up online for the bank to automatically move money from your checking into a savings account or savings bucket.
Some banks also offer things like Round Ups to round up your spending and transfer the round up into your savings.
If your bank doesn’t offer automatic savings, then you can also look into doing it with your workplace. Often workplaces will divide your paycheck into up to 5 different bank accounts– you just need to set it up with your employer’s HR.
2) Don’t focus on every dollar spent, instead focus on how much you’re saving, investing, paying off debt.
Now we’ve got some caveats here…
I am a big fan of tracking every dollar for beginners. In fact, I think it’s helpful for everyone to do at some point because it creates a mental and behavioral shift that is necessary in order to make a change.
See: Values-Based Budgeting and How to Build a Budget
But once you’ve been doing it for a bit and you have a good handle on what comes in and what goes out, and you’re able to manage your spending, then you can eventually step back and stop focusing on every. single. dollar.
Cause that can get tedious, right?
After spending 3 years doing a zero-based budget, I really don’t do it anymore.
Now, I focus on 2 things:
- How much I’m saving/investing
- How much I’m making
If I had multiple goals, like paying off debt, saving for an emergency fund, etc– then I’d also be focusing on those goals.
But now, as long as I hit those investing goals– then I’m good and I don’t care where else my money goes. I prioritize my investing, and everything else? I can spend as I please.
3) I don't keep unassigned cash on hand.
Cause it’s not working hard for me! I only keep cash that has an assigned purpose in my HYSA— for example:
- Cash in my emergency fund
- Cash for tax payments
- Cash for the upcoming month of expenses
Everything else is invested.
If you’re trying to organize your finances and make sure every dollar is assigned, instead of opening multiple bank accounts, see if your bank offers savings buckets. Banks like Ally have savings buckets so you can visually organize your money without having to open individual savings accounts.
These buckets are a nice visual reminder to see that the money in that bucket is assigned. called for, already got a job– so you don’t use it on something else.
4) I don't buy individual stocks, I buy bundles of stocks.
I don’t buy individual stocks, and I think most folks don’t need to.
Investing in individual stocks is less like investing and more like gambling. You’re betting your cash that ONE company will do better than the average returns of the market (10%) which can come with some big rewards, but it can also be really risky. You have no idea what’s going to happen with a single company– the top ten performing stocks change all the time.
I especially don’t find buying individual stocks appealing when index funds exist.
Think about index funds like bags of chocolate bars.
When you try to buy individual stocks, it’s like shopping for a chocolate bar.
Hopefully you know what you’re craving– cause you’re only getting one chocolate bar!
Now what if instead you decided to buy an entire Halloween sized bag of candy bars?
And inside of that bag you get hundreds… actually THOUSANDS of different candy bars inside it!!! But all you had to do was buy one bag.
That’s kind of what it’s like to purchase an index fund. I’d rather buy all the stocks, knowing a few inside the bag of chocolate are winners.
Learn more about index funds here or attend my free investing class this month to learn more.
5) I don't pay attention to the stock market.
Like, much at all if ever.
I know, that probably shooketh most of you.
But here’s why:
Paying attention to the stock market does absolutely nothing for me. Nothing– nada.
I have decades upon decades before I plan to retire, so what happens in the short term?
It’s none of my business.
And when we are experiencing as much volatility as we are at the moment in the stock market?
All watching the stock market is going to do for a long-term investor– is stress you out for no reason.
Here’s the thing:
Time in the market beats timing the market and there have been studies to support this. When looking back at stock market returns since the 1920s, over almost any 20-year time period, investors who bought and held the S&P 500 would’ve made money even considering major setbacks including the Great Depression, Black Monday, the tech bubble and the financial crisis.
Of course it is possible to get lucky and beat the market by buying low and selling high, theoretically. But it’s really difficult to achieve— even Harvard grads can’t consistently beat the market— so me?
Yeah, I probably won’t be able to. Instead, I just buy and hold my well diversified portfolio and don’t worry what’s going on with the stock market.
I’ve got better things to worry about.
To see more studies on the benefits of buying and holding, and how not to lose money in the stock market– come to my free class where I’ll share even more research!
Keeping it Simple
In order to set ourselves up for success, we have to keep things simple. Hopefully with these five steps there’s a few things you can implement ASAP to start automating your finances.