Is your resolution this year to improve your finances? It can be a long and daunting process that disheartens too many people. But a good place to begin is to take a few steps to simplify your finances so that you can know and control them better.
Fortunately, it's easier (and cheaper!) than most people think to simplify your money and manage it with less hassle. Here are 7 steps anyone can follow.
Start at the Bank. The easiest place to begin simplification is at your bank. If you (or you and your spouse) use more than one bank, pick one and move everything to the same place. Close unused accounts and consolidate savings accounts. If you need multiple savings accounts, consider an online bank that offers "sub-accounts" or categories in which you can place money within an account. Sign up for online banking (see the next step) with a company like Western Bank.
Automate it. Learn about your bank's online banking options, then put them to use. Through online banking, set up any large and recurring bills as an automatic payment for at least the minimum amount. Create automatic savings and retirement account transfers as well. Get online statements to make record-keeping a breeze.
Close Old or Small Credit Accounts. Closing old, unused credit cards doesn't affect your day-to-day life at all. Close one card per 6 months to minimize the effect on your credit score. Also, pay off and close any small "nuisance" credit cards -- accounts with a small balance that you rarely use -- to avoid late or missed payments. Consolidate smaller cards into one or two larger ones to make payments easier and less expensive.
Create a Pen-and-Paper Budget. Budgeting is an important financial skill that too many people feel is too complicated to be successful at. Get rid of this complexity by starting a budget on a single sheet of note paper. If you are creating more than a handful of expense categories or savings goals, simplify your plans and broaden your categories. A budget that everyone in the family understands is one that everyone can help keep.
Try Cash. Credit and debit cards seem like they are more convenient, but they require tracking, add to your monthly payments and can lead to overspending. Try a cash diet for at least 6 months to get spending under control. So leave the cards at home. Instead, separate your spending cash into a few envelope categories so you can see what money is left with the simple opening of an envelope.
Pay Bills Twice a Month. Rather than juggle bills, make a regular schedule to pay them in batches twice a month (or once a week if necessary). You will soon find that you can adjust due dates and mail payments a little early if necessary to accommodate creditors. Place waiting bills in one location for each semi-monthly batch.
Finally, Quit Paying Monthly. Fewer monthly bills means simpler finances. So start looking for ways to prepay bills such as insurance or property taxes. Don't purchase items on monthly payment plans; instead, save up and pay for them upfront. Get rid of subscriptions and try bundling services for better and simpler rates.
Following these few steps in this new year will go a long way to helping you not only create a simpler financial life but also get your money better under your control. And that's a resolution that can do good well beyond 2016.