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7 Ways To Simplify Your Finances

June 11, 2021 · 8 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

7 Ways To Simplify Your Finances

Sometimes, there’s nothing easy about money. The older you get, the more obligations you may have. Between checking, savings, IRAs, 401(k)s, bills, loans, mortgages, and more—it can be a lot to keep track of and manage.

If thinking about your finances causes you to feel stressed and/or you find yourself putting off important financial decisions, it may be time to simplify. While streamlining your personal finances can take a little bit of time and effort in the short term, it can end up saving you time, effort, as well as money, over the long haul.

Here are seven simple moves that can help you manage your money more efficiently–and more effectively.

1. Automating Your Bills

One of the easiest ways to simplify your finances is to set up auto payment whenever possible. Putting all of your bills–including credit cards, utilities, insurance, loans, mortgage, and even rent–on autopilot can save you significant time and hassle each month. Plus, you won’t have to worry about late payments–or late fees.

You can often set up automatic payments for your bills by going to the website of the service provider and inputting your bank account information.

If a business doesn’t offer an automatic payment program, you may be able to set up a recurring payment through your bank by logging on to your checking account or using your bank’s mobile app.

2. Going Paperless

A major culprit of personal finance-related headaches is paperwork. Keeping track of the many documents—all those receipts, investment reports, bank statements, tax returns-—can be a struggle.

Many services allow you to opt-in to a paperless experience instead. You’ll typically have access to all of the documents when you log into your account. And, with everything just a click away, you won’t have to worry about finding misplaced paper documents.

If you’re interested in leveling up your organization, you could even set up a digitized archive of your important information and files on your computer or an external hard drive, so you never have to spend hours searching through file cabinets and miscellaneous envelopes.

You can also reduce physical–and mental clutter by taking advantage of the many retailers and service providers that offer email, rather than paper, receipts. Or, you may want to consider getting an app that scans, organizes, and stores receipts, such as Smart Receipts .

You can also get an app for filing and organizing your paperless statements. FileThis , for example, not only captures receipts, but also seeks out your online statements and bills and automatically downloads and files them to the cloud.

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3. Consolidating Accounts

Whether you’re married with three kids or single with two Labradoodles, there’s a good chance that you have more financial accounts than you need. Consolidating multiple bank accounts into just a few can help simplify your financial life. In some cases, it can also help you save you money.

If you’ve done a lot of job hopping in your career, for example, you could have multiple 401(k)s floating around. When you leave a company but don’t roll over your 401(k), you’re often subject to fees that your employer may have been covering while you were employed.

By rolling your 401(k) into an IRA, you may be able to minimize fees. Another plus is that you’ll also have all of your funds in one spot. And, you may be able to select from a wider selection of funds and investments than the ones selected by your previous employer.

If you have more than one checking and savings account, you may want to see if you can pare it down to one of each, ideally under the same roof. Or, you might want to consider switching to a checking and savings account, which functions as both a spending and saving account in one product.

You may also want to look at bundling your insurance policies. Many companies offer substantial discounts if they write both your auto and homeowner’s policies.

4. Using One Credit Card

If you signed up for a variety of credit cards, chasing the promised rewards they offered, you may have racked up more than a few credit accounts.

To make it easier to keep track of your spending, you may want to pick the card that offers you the most in return, whether that’s cash back, travel rewards, or other perks, and focus on using only that credit card.

By putting everything on one card, you’ll only have one credit card bill to pay each month, a single statement to monitor for errors and fraud, and one rewards program to track. Plus, you won’t have to think about which card to pull out whenever you’re making a purchase.

Rather than canceling your other cards (which could negatively impact your credit score), you may want to just store them away in a secure place.

5. Knocking Down Debt

One of the most effective ways to reduce financial stress is to get rid of high interest debts.

Paying off even one sizable credit card or loan can not only ease worry, but can also reduce the number of financial obligations you have to deal with each month. It can also free up money that you can then put towards something else, whether that’s getting rid of other debts or something fun like a vacation.

Two common strategies for paying off debt are the debt snowball and debt avalanche method.

With the debt snowball method, you list your debts in order of size, then put any extra money you have towards the debt with the smallest balance, while paying the minimum on the others. When that debt is paid off, you tackle the next-smallest debt, and so on. Paying off debts in full can help you feel accomplished, simplify your life, and inspire you to continue crushing your debt.

With the debt avalanche method of paying off debt, you list your debts in order of interest rate, then focus on putting extra money towards the debt with the highest interest rate first, while paying the minimum on the rest. When that debt is paid off, you put extra money towards the debt with the next-highest interest rate. While it may take you longer to see progress on your loans, you’ll likely pay less money in interest over time using this method.

6. Putting Saving on Autopilot

The set-it-and-forget-it approach can be highly effective when it comes to saving money. For one reason, you don’t have to remember to transfer money from your checking to your savings each month. For another, the money will get whisked out of your checking account before you ever have a chance to spend it.

You can automate savings in just a few minutes by setting up a recurring transfer from your checking to your savings account for a set amount of money on the same day each month (perhaps the day after you paycheck clears).

Even if you can only afford to transfer a small amount each month, it can be worth automating this task. Since the savings will happen every month no matter what, your savings will gradually build over time.

7. Focusing on Fewer Goals

It can be great to have financial goals. Many of us have plans to buy a home, put kids through college, and pay for our retirement. But if you set too many goals at one time, you can end up losing focus, and not making any progress on any of them.

A better approach can be to set just one or two goals to fully focus on at one time. Ideally, one should be saving for retirement, since the earlier you start saving for retirement the easier it is to reach your goal.

The other goal might be paying off your credit card debt or student loans, saving for a down payment on a home, or putting money aside to help pay for your kids’ college education.

By focusing your energy on just one or two specific goals, you may be able to make real headway. Once you start seeing progress–or actually achieve the goal–you’ll likely be inspired to set, and accomplish, other goals.

The Takeaway

Simplifying your financial life may take a bit of legwork up front, but in the long run, it can help alleviate stress and also help you better plan for your financial future.

Strategies that can help you simplify your finances include paring down the number of accounts you have, crossing off debts, automating monthly tasks like paying bills and transferring money to savings, and focusing your efforts on just one or two financial goals at a time.

Another move that can help make it easier to manage and track your money is to open a checking and savings account, such as SoFi Checking and Savings®. With SoFi, you can earn competitive interest, save, and spend all in one account.

Learn how SoFi Checking and Savings can help you simplify your financial life.

3 Great Benefits of Direct Deposit

  1. It’s Faster
  2. As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.

  3. It’s Like Clockwork
  4. Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.

  5. It’s Secure
  6. While checks can get lost in the mail — or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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