5 Easy Tips to Simplify Your Finances
Understand a rough 3-month budget for you and your family. Take a look at your last three months of expenses and determine your average expenditures. Then follow these easy steps to simplify your finances.
Debt Consolidation / Lower Interest Rates
Consolidate as much debt as you can at the lowest interest rate possible or try to lower all of your interest rates. Pay the absolute maximum you can afford. Whether this is auto loans, student loans, credit card debt, etc.
- Automate all your bills and credit card payments
- Set everything up to autopay
- Pay off your credit cards every month – you can set your autopay to pay the total balance on the card
High-Yield Savings Account
Set up a high-yield savings account with automatic funding at a bank separate from where you hold your checking account. This makes it that much harder to pull money out.
You have to be very intentional when you transfer money out of your savings account, plus it typically takes a couple of days to transfer. Thus, you should be less likely to pull from it for frivolous spending.
Establish a 6-month emergency savings fund. You never know when the water heater might break, you lose your job, you need to replace your furnace or A/C, or a large veterinary bill or medical bill comes up. Be prepared. If the fund is established, when something happens, you will be much less stressed knowing you have a substantial safety net.
Suppose you don’t have one already, set up a Roth IRA and begin contributing up to $500 per month. You can contribute up to $6,000/year. There are rules to this depending on your income but if you are within the threshold you absolutely want to set up this retirement account. I have my contribution set up to automatically pull from mine and my husband’s checking accounts every month.
Automation gives you the opportunity to tackle the first step in budgeting. Understand where your money needs to go, and how much. After, you can allocate the leftover to anything else you need or want.