Are you feeling overwhelmed?
You’re not alone.
We live in an age where time is probably the most valuable resource but also the scarcest.
That said, adopting a simpler financial life can save you tons of time and mental energy.
That’s less stress on your mind and more time to focus on your work, family, and the things you love.
In today’s article, I’ll give you a couple of valuable tips that will help make your financial life so much simpler.
1. Recognize That You Solely Control Your Finances
The first step to simplifying your financial life, and becoming financially secure, is truly accepting that you drive your finances.
You alone are in charge of every earning, spending, saving, and even investing decision in your life.
This acceptance alone can help you work towards developing smarter money habits that will eventually simplify your life.
2. Develop a “Conscious Spending Plan”
Take fixed cuts off your paycheck and automatically spend them towards your goals.
Spending money intentionally is one of the best habits for saving money and keeping your financial life simple.
Don’t waste your money- and time- buying things you don’t need or won’t use.
Intentional spending is about asking yourself why you want to spend money on something before reaching into your pocket.
Now, if you want to control your spending and achieve financial freedom faster, I’d recommend watching my video on the “50/30/20 budgeting rule.”
3. Automate Bill Payments and Savings
Do you spend hours every end of the month going through and settling your bills? Save yourself those stressful hours and make your life easier by automating bill payments.
With automation, you can go about your life while your paycheck gets deposited automatically, your bills get paid automatically, and savings are automatically deducted from your checking account.
Plus, setting up automatic saving deductions eliminates temptations as you now know how much is left for you to spend.
You also save intentionally and not just what remains in your account after you’ve paid for everything.
4. Apply for Larger Credit and Get Rid of Cards That Come with High Fees
The beauty of making payments with your credit card is earning points that you can later redeem for rewards.
To maximize this benefit and, in turn, boost your credit score, consider applying for larger credits on your credit cards.
Remember, not all credit cards are good value. Some come with high annual fees.
So, you want to get rid of those if you have them.
To maintain good credit, make sure you’re spending what you can pay off and clearing your balance in full on time.
5. Consolidate and Work on Paying Off Your Debts
Accumulating debt is one of the surest ways to complicate your life and derail your financial freedom.
So, you want to practice living within your means and focus on paying off your existing debts.
If you have multiple debts, consider consolidating them as it helps you simplify and streamline payments.
6. Set up an Emergency Fund
One of the best financial decisions I’ve made in my life is setting up an emergency fund.
Knowing that you’re secure if something unexpected happens, like car troubles, temporary incapacitation, etc., gives you peace of mind.
It also saves you from additional debts and the stress of looking for the money you need in an emergency.
So, how much should be in your emergency fund? Target putting aside at least six months’ worth of your living expenses.
7. Put Your Money in Passively-Managed, Long-Term Investments
After you have paid off your debts and built an emergency fund, you should start investing for your retirement, even if you’re still in your 20s.
However, choosing the wrong investments can make your life a lot more stressful. Ideally, you want something that doesn’t take up much of your time or effort but helps grow your wealth.
I’d recommend avoiding day trading as it’s both risky and time-intensive.
And, unless you’re a seasoned investor spending all your time following up on the markets, keep off single stocks too.
Instead, go for high-performing mutual funds, ETFs, and index funds, which tend to outperform the markets, and invest with a long-term goal in mind.
If you decide to go with EFTs, make sure you understand the critical components of a good ETF.
Always look at the expense ratio, tracking error, bid/ask ratio, and diversification.
A lower expense ratio is good because it means that the fund’s operational costs are low.
The same goes for tracking errors, as you want the ETF to track the underlying asset accurately. The bid/ask ratio reveals the liquidity of a fund.
So, a lower ratio means that the fund has lower liquidity and vice versa.
As for diversification, the higher it is, the better, as the investment risk is well spread out.
The first step to simplifying your finance is to get started.
You don’t need a degree in finance or an MBA for this part; you just need the desire to change your life for the better.
I hope you got some valuable pointers from this article. If you want to learn more about how to reclaim your emotional, spiritual and financial sovereignty, be sure to check out my pages / YouTube channel.