6 Ways to Simplify Your Finances and Save Time
Key Takeaways
- Simplifying your finances can save time, reduce stress, and help you focus on what matters most.
- Understanding your spending helps you make intentional purchases and avoid unnecessary financial tasks.
- Maintaining appropriate cash reserves and simplifying your accounts can make everyday money management easier.
- A diversified investment strategy can reduce the temptation to constantly monitor markets and make changes.
- Taking care of major financial decisions now, then reviewing them periodically, can give you more time to enjoy your life.
As I work on the never-ending task of aligning my life with who and what I want to be, I've realized that a big part of this is minimizing the time I spend on unfulfilling activities.
For example, I play a lot less tennis than I used to and spend more time reading.
But I've also started managing my time in shorter segments.
Rather than spending an entire day on the couch watching TV, I'll sit down for 20 minutes of relaxation.
Surprisingly, I find those 20 minutes much more enjoyable than my previous all-day sessions!
I can't pinpoint exactly what's causing this change, but I suspect it has something to do with getting more value out of each day.
As I think about people in my community and reflect on my experience working with many of you, I see something similar happening with personal finances.
A lot of time and effort goes into managing money without always getting much value in return.
So, how can we change that?
Here are six ways to spend less time managing your finances and more time enjoying your life.
1. Get Value for Every Dime You Spend
We live in an expensive place, and it's easy to feel like money is falling out of our pockets as we walk down the street.
Often, this happens because we aren't evaluating the actual value of our purchases. We may not even know exactly where our money is going.
Instead, consider whether each purchase improves your life enough to justify its cost.
This is a lifelong process because our wants, needs, and opportunities change over time.
Complacency can lead us to spend money on things we don't truly value.
How Does This Save Time?
You might be thinking, "Sure, spending less saves money, but how does it save time?"
Well, fewer purchases mean:
- Less time shopping and checking out.
- Fewer transactions to review.
- Less time managing bills and payments.
- More time for activities that actually bring you joy.
And here's something else to consider.
Caution: You might think, "Gee, instead of cutting expenses, why not just focus on making more money?"
That, friends, can actually make things worse if you're not paying attention to the value you're getting from your spending.
Why?
Because no matter how you earn that extra money, the additional income may not last forever.
Your expenses, however, can become permanent.
The goal isn't simply to spend less. It's to spend intentionally.
2. Keep More in Your Bank Accounts
Specifically, consider maintaining enough money in your checking and savings accounts to comfortably manage your everyday expenses.
This can help you:
- Spend less time transferring money between accounts.
- Feel more confident when larger expenses arise.
- Prepare for unexpected emergencies.
- Take advantage of opportunities without disrupting your investments.
Of course, the right amount will be different for everyone.
If you constantly find yourself moving money between accounts to cover expenses, maintaining a larger checking balance might be an elegant solution.
And while checking accounts may not offer competitive interest rates, their primary purpose isn't necessarily to maximize returns.
Their purpose is to fund the operations of your life.
For money you don't need immediately, a high-yield savings account or another appropriate cash option may offer a better return while keeping those funds accessible.
The important thing is to give your cash a purpose and avoid unnecessary account management.
3. Use One Primary Credit Card
Here's one of my favorite ways to simplify everyday spending.
Use one primary credit card for most purchases.
Think about it.
There's no decision to make at checkout. You simply pull out your card and pay.
At the end of the month, you receive one statement showing most of your expenses.
Without hiring someone to track your spending for you, there aren't many easier ways to see where your money went!
What About Rewards and Points?
I know what you're thinking.
What about all those bonus points, miles, and special offers?
If you enjoy maximizing credit card rewards, that's fine.
But remember that managing multiple cards takes time.
You have to decide which card to use, track rewards, monitor statements, and sometimes manage annual fees.
Ask yourself whether the additional rewards are worth the time and effort.
My recommendation is to choose a card with good rewards or cash back and use it consistently.
You may also want to keep a backup card available in case your primary card is lost, compromised, or temporarily unavailable.
Another Tip: Use Less Cash
Cash can make spending harder to track because you don't automatically have a detailed record of each purchase.
Using your credit card can simplify record-keeping and help you understand your spending habits.
Of course, this approach works best when you pay your statement balance in full each month and avoid interest charges.
And remember, every purchase is another opportunity to ask:
Is this something I truly value?
4. Simplify Your Investments
It's important to have a well-diversified investment strategy you can stick with in good times and bad.
But don't make it unnecessarily complicated!
Think about the markets from a top-down perspective.
Start with two broad categories:
- Stocks: Investments that provide opportunities for long-term growth.
- Bonds: Investments that can provide income and help manage portfolio risk.
Within stocks, you can diversify across categories such as:
- U.S. Large Cap
- U.S. Small Cap
- International Developed Markets
- Emerging Markets
You don't need to spend your time trying to identify the next winning stock.
Instead, focus on creating an asset allocation that supports your long-term financial plan and reflects the amount of risk you can tolerate.
Make Every Trade Count
When it's time to make a contribution, withdrawal, or rebalance your portfolio, use that opportunity to move closer to your target allocation.
For example, if your portfolio has become overweight in U.S. Large Cap stocks and you need to withdraw money, consider selling from that category.
This can help bring your portfolio back toward its intended allocation.
Don't create extra work by making unnecessary trades that you'll need to correct later.
A thoughtful investment strategy should make your financial life easier, not more complicated.
5. Quit Watching Your Investments
Along with simplifying your investments, stop paying so much attention to them.
Seriously!
If you've built a solid investment strategy, there may be little reason to make frequent changes.
The markets will do what they're going to do.
Constantly checking your portfolio won't change that.
Be Careful With Financial News
One way to reclaim some time and peace of mind is to limit your exposure to financial media.
Television networks like CNBC and online market commentators compete for your attention.
And how do they get it?
By making financial news feel urgent.
Most of the time, investing is pretty dull. Markets fluctuate, companies grow, and long-term investors continue following their plans.
But that's not particularly exciting television!
So, small market movements can become major headlines.
Don't let the financial media convince you that every market movement requires action.
Many financial firms also benefit when investors trade frequently or purchase additional products.
Their incentives aren't always aligned with yours.
Sometimes, the best thing you can do for your portfolio is simply leave it alone.
That doesn't mean ignoring your investments forever.
It means reviewing them periodically, rebalancing when appropriate, and avoiding unnecessary changes driven by headlines or emotions.
6. Get the Big Stuff Done and Move On
Here, I'm talking about major financial planning decisions such as:
- Life insurance
- Estate planning
- Disability insurance
If you need these protections, get them in place and keep the process as straightforward as possible.
Life Insurance
If you have children or others who depend on your income, you may need life insurance.
A term life insurance policy can be a relatively simple and cost-effective way to provide protection during the years your family depends on your earnings.
The goal is to have appropriate coverage for the period when it's needed.
Estate Planning
Put together an estate plan that accomplishes what you want if you become seriously ill or pass away.
This may include:
- A will or trust.
- Powers of attorney.
- Healthcare directives.
- Guardianship arrangements for minor children.
Once these protections are in place, you don't need to worry about them every day.
However, you should review them periodically and after major life changes, such as marriage, divorce, the birth of a child, or significant changes in your financial situation.
The goal is to make thoughtful decisions now so you don't have to keep revisiting them unnecessarily.
Don't worry. Don't panic.
Just get it done and get back to living your life!
What Gets in the Way?
It's easy for me to sit here and tell you to simplify your finances, right?
But I understand that it's often easier said than done.
Many of these suggestions involve changing habits you've developed over years.
And changing habits takes time.
Don't try to change everything at once.
Instead, pick one area where you can make an improvement.
Maybe it's consolidating your everyday spending onto one credit card.
Maybe it's simplifying your investment portfolio.
Or perhaps it's finally completing your estate planning documents.
Start with one change and see whether you can reclaim a little more of your day.
Don't Make Simple Things Complicated
Another challenge is getting too deep into the technical details.
If you find yourself overwhelmed by a financial decision, ask whether you really need that level of complexity.
Often, a simpler solution will accomplish what you need.
And if you do need professional help, consider working with someone whose compensation doesn't depend on selling you additional products or making your finances more complicated.
The Good News
This is all simple but difficult.
Once you recognize that, you can begin looking at your finances differently.
The financial industry often makes managing money seem more complicated than it needs to be.
Complexity can create opportunities to sell additional products and services, but it doesn't necessarily create more value for you.
Your financial life doesn't need to be complicated to be successful.
In fact, reducing complexity can save time, lower stress, and help you make better financial decisions.
And perhaps most importantly, it gives you more time to focus on the things that truly matter.
After all, isn't that what living your Best Financial Life is all about?
To share your comments, send me a direct email at Joe@BestFinLife.com.
Do you need help streamlining your finances? Ready to explore simpler solutions that provide more value?
Schedule a complimentary virtual conversation here.
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