21-28: Simplify Your Finances
Easy come, easy go, but not so easy to understand, money management is a whole thing – so today we’re going to scratch the surface by breaking it down into manageable buckets. Because everyone’s finances are different, we suggest digging in if you see a topic that’s interesting or confusing for you. While there’s no one-size-fits-all approach, with a little education and the tools that suit your style and situation, you'll be glad you took the time to optimize and ultimately simplify.
21. Visualize Your Cashflow
Follow this financial flowchart on a step-by-step journey through your personal finances to identify all the buckets you'll be putting your bucks into. Do you have loan payments to make? How’s your emergency fund looking? Once you have clarity on your cashflow, automate what you can – payments for credit cards, utility bills, insurance, savings and investments.
For at-a-glance assessment, Mint is a free dashboard to monitor your various banking, savings, and even retirement accounts in one place. Plus you can set up goals and alerts, and it’ll learn to categorize your transactions; it’s incredibly powerful to witness your spending habits, a necessary step for accurate budgeting. Of course, this no-cost tool comes at a cost: Unavoidable third-party offers. Still, in our experience the benefits far outweigh the expense – which is $0.
If Mint’s basic budget feature leaves you wanting more, You Need a Budget (YNAB) is popular for a more hands-on approach. While it is a paid app, YNAB does offer various free workshops open to anyone.
22. Don’t Miss the Point of Points
New credit card bonus offers and points are free money, right? Not if benefits go unused or outweigh the card’s annual fees. Having countless pieces of plastic just to game the system certainly isn’t simplicity – plus it can harm your credit.
Finding the right card that suits you is priceless, be it points towards travel or earning triple on grocery shopping. Nerdwallet is a great resource to decide on the best option for you. Bonus: Fewer cards means your slim wallet stays slim, something we know a thing or two about.
Whenever possible, put recurring bills on your credit card instead of using your debit card. Not only are credit card transactions significantly safer against fraud, but credit utilization and payment history are the top two factors that affect your credit score! Check your credit score for free (and without hurting your credit) with Credit Karma, and Mint that we mentioned earlier also offers access to free credit checks.
23. Consolidate What You Can
As with most things in life, fewer moving parts means less opportunity for mistakes, excess fees, and unnecessary expenses – so consolidate your bank accounts as well as your investment accounts where possible. While you're at it, opt for paperless billing and statements to simplify your filing system.
And in what must be the OG of consolidation, take advantage of offers from insurance providers to “bundle” different types like home, auto, etc. This not only leads to savings, it also puts them all under one roof which is simpler for you to manage.
If you're in a position where you're juggling multiple assets, there's a good chance you'll benefit from consolidating – which can get overwhelming if not impossible to do all by yourself. Ask around if your friends have a personal financial advisor they love, or do a search for an advisor near you. More on asking the pros later.
24. Put Saving on Autopilot
Whether it’s putting money aside for a vacation, a big purchase, or taxes (hey freelancers), being disciplined with your dollars isn't easy. That’s why Qapital offers methods based on behavioral science so you find a way to save that really works for you. An even simpler option is Digit which squirrels small amounts away automatically.
Specific to health-related expenses, some healthcare plans allow you to have a Health Savings Account or HSA which gets you a “triple tax benefit.” Check with your insurance provider or consider a service like Lively.
25. Investing Made Easy (No, Seriously)
It may sound absurd to “simplify” the stock market, but that’s exactly what some innovative services aim to do. A long-standing leader in investment management is Vanguard, with some of the most highly rated mutual funds out there; take their assessment to see if they're a good fit. Lately Betterment has become a popular robo-advisor for good reason, with minimal management fees and socially responsible investment options. And considering they also offer checking and savings plans, it could be a one-stop-shop for some of you folks.
If your employer offers a match for retirement investments, invest at that level to get the full benefit (a classic free-money no-brainer). For help managing your 401(k), there’s a robo-advisor we like called Blooom (affiliate link, get $40 off if you sign up after a free analysis). Blooom makes optimizing an employer-sponsored retirement plan super easy: It tracks your expense ratio on your investment accounts, allows you to automatically rebalance your assets based on your risk tolerance, and tests you for your risk tolerance.
The "easy button" for a retirement fund is selecting a target-date fund which adjusts the portfolio’s risk profile as you near retirement – it's about as simple as it gets! And fortunately the evidence shows index investing beats stock picking on average, especially in the long term. Popular zero-fee brokers include Fidelity and M1 Finance, which has a streamlined interface that makes long-term investing more accessible than, say, the Bogleheads 3-Fund Portfolio method of crafting your own “lazy portfolio” with some DIY effort.
Investing in a home? Great resources for first-time home buyers and refinancers include Loan Cabin and Better (fast and with fewer fees does sound better). Modern, online lenders are sometimes cheaper and easier than local credit unions nowadays. Hint: Ask for the “no-cost” rate, meaning the lender pays closing costs, to make sure you’re comparing apples to apples. Then again, there's always Fundrise, an accessible way to invest in real estate without the headaches of being an actual property owner.
If all this is sounding a bit much, the micro-investing app Stash offers a free resource StashLearn to help you not only with investing but financial literacy in general. And remember, however you invest, set up automatic monthly deposits to be truly hands-off.
26. Stay on Top of Subscriptions
Speaking of automatic monthly expenses, it’s good practice to review your subscriptions and cancel what you don’t use. Here’s an idea: schedule a review annually on your half-birthday, and consider the savings a nice gift to yourself. Need some assistance? Truebill helps edit down your subscriptions so you aren’t spending money unnecessarily.
Some memberships are worth every penny, whereas others were admittedly made during an emotional moment where the promise seemed worth the $35/year though you never got past setting up your account (no judgement). Take the time to sit down and do a comparison – like Mr. Money Mustache did when he was curious about Costco. If you didn’t get your money’s worth, nix it for next year and put that $35 towards the next round!
27. When in Doubt, Let the Pros Do It!
Sometimes the simplest option may be to just pay the professional instead of spending your time researching or solving whatever you’re working on. Hiring a Certified Financial Planner (CFP) may make sense, as NerdWallet advises:
Not everyone needs help with their finances, but for those who do, having a CFP in your corner can be invaluable. If you aren't sure how to organize your finances, navigate investing or balance your financial priorities, a CFP can help. Bound by their fiduciary duty, CFPs have to put their clients’ needs first regardless of their fee structure (though it’s always a good idea to ask any advisor, CFP or not, what their fee structure is, and to work with a fee-only advisor if possible).” –NerdWallet
Other ideas include using a financial advisor with an hourly rate for a retirement-planning session, or hiring a CPA (Certified Public Accountant) if your taxes are complicated. If paying for assistance is a stretch (and some would argue unnecessary), ask around for free resources in your area, search the IRS for free tax help near you, and your public library is a fantastic resource.
28. Find Someone Who Speaks to You
You can have some fun with this one... Maybe Mr. Money Mustache’s promise of “financial freedom through badassity” is the kind of attitude you need to make money-management interesting. After all, the guy retired in his 30s! If financial independence and retiring early (aka FIRE) sounds good to you, Mad Fientist is for you; don’t miss his free FI spreadsheets and podcast.
Tune in to Paychecks & Balances for “down-to-earth and relatable approach to personal finance and career advice” – and who wouldn’t trust a man named Rich Jones with money matters?
An illuminating podcast is So Money with Farnoosh Torabi for interviews and random #AskFarnoosh Fridays where listener questions (what’s the Tooth Fairy’s going rate?) are at least entertaining if not directly applicable to your situation. Fortunately money doesn’t have to be serious business – the point is to find whatever helps money be the last thing on your mind.