As we settle in to a new season and a new school year, it’s only fitting that we reset our headspace and fashion some last-minute goals for the year. Inspired by this month’s theme of simplicity, I’m on a mission to declutter my calendar, my closet, my to-do-list—and yes, my finances—to leave some room for what matters most. I think we could all use a little breather from the complexity of our lives, and the same can be said for our money. Simplifying, minimizing, and distilling down our finances can help us eliminate stress and regain control. These are the strategies I’m adopting this season to get organized, save money, and ultimately achieve my long-term financial goals.
1. Organize your financial accounts.
The first step toward simplifying your finances is understanding exactly what you’re working with. Start by taking note of all your financial accounts. Think about your checking, savings, 401(k), IRA, investments, student loans, mortgages, and credit card debt. The point of this exercise is to track all of your financial accounts in one place. Whether you keep a catalogued journal, maintain an Excel spreadsheet, or prefer a technology app to do the work, knowing where your accounts stand will go a long way toward gaining control of your money.
2. Automate everything.
Step two: automate, automate, automate! Now that you’ve collected your various accounts, reduce the amount of time you dedicate to them. If your employer pays you by check, transition to direct deposit. If you manually pay monthly rent, set the system to auto-debit your checking. While you’re at it, set all your bills to autopay. That goes for credit cards, too. If you’re over 30 days late on a payment, the record will hit your credit report and stay there for up to seven years! So save yourself the headache. Autopay is your new BFF.
3. Consolidate your 401(k)s.
If you’ve worked for more than one company during your career, chances are you have more than one retirement account with more than one financial institution. Consolidating your 401(k)s and IRAs into one account will declutter your personal balance sheet and make it easier to manage and invest them. You have a few choices when it comes to your old 401(k)—leaving it as is, rolling it into a new 401(k), or rolling it into an IRA. There are benefits to each approach, and I’ve broken down each option so you can find the best one for your personal situation.
4. Start paying down debt.
By now, you’ve narrowed down your accounts, and your bills are humming along on autopay. Now it’s time to turn your attention toward the elephant in the room: your high-interest debt. If you took on student loans to get through school or swiped your credit card too many times, you’re not alone. Consumer debt has become a huge problem in today’s society, but it can be fixed with the right mindset and paydown plan. Start small, and make sure you celebrate your successes along the way!
5. Create an emergency fund.
Simplifying your financial life will position you to succeed when you face an obstacle. Whether your A/C breaks down in the middle of summer, your car engine dies, or you’re in between jobs, it’s important to have some cash you can draw on to bridge the gap. Saving money in an emergency fund is the best way to give yourself some breathing room if and when you experience a tight spot. Continuing our automation trend, my favorite way to save money is with Qapital. This free app makes saving fun and effortless and can help you save in a variety of ways—rounding up your purchases, transferring money when you get paid, and even saving cash when you hit the gym by connecting to your fitness apps. The options are endless, and Qapital will help you hit your savings goals before you know it.