Too Much Financial Clutter? 5 Steps to Tidy Your Money Life

Taking care of your finances can be stressful and time-consuming — but it doesn’t have to be. Taking a few simple steps can make money management effortless, enabling you to spend just a few minutes a month ensuring that you’re accomplishing your goals and are on track for a secure future.

Not sure where to start in simplifying your process? Taking five simple steps will make all the difference in ensuring that managing your finances is easier than you imagined. 

Digitize your documents

Keeping financial paperwork organized can be a huge hassle. You may have receipts for taxable expenses or for items with warranties, billing statements you have to keep track of, investment and bank account statements you’re using to track your networth, and a whole lot more.

If you can scan and digitize this paperwork, you can eliminate the physical clutter and ensure that sorting through and finding the proper documents is easier than ever.

This can be as simple as having a password-protected area on your computer where you have different subfolders for different categories of documents including tax forms or brokerage statements. Decide on a uniform naming system for similar files, then save them in the appropriate folder so you can easily sort and search. 

Since you can also sign up for e-delivery of most statements and even tax forms these days, you may not even need to scan your items into the computer to get digital versions of them that you add to your virtual filing cabinet. You can download the forms when they become available and move them right into the folders where they need to go. 

Automate your financial life 

Automating your financial life can also make a huge difference because it eliminates a lot of time and ensures that you make the right money moves. You should be able to make almost every financial transaction you do over the course of the month automatic. For example, you can:

• Set up automatic mortgage or rent payments
• Arrange for money to transfer automatically to different retirement, savings, and brokerage accounts
• Arrange for automatic bill pay

See when your payments are due, decide which will come out of each paycheck, and set up the transfers right on the day that your pay comes.  For example, you might decide to pay your mortgage, car payment, and utility bills out of your first paycheck and your retirement savings and other bills from your second paycheck. 

If you set up systems so all of your payments and savings transfers come out at the appropriate time, not only will you avoid missing payments but you will also know that money left in your bank account is yours to spend. This way, you don’t have to think as much about tracking where every single dollar is going since your goals will be taken care of first. 

Just be sure you are living on a budget and have the funds to send to all of your different transfers so you don’t end up over-drafting your account.

Consolidate your accounts

Managing multiple different accounts can be an unnecessary challenge, so aim to consolidate and simplify when you can.

For example, if you have a bunch of 401(k) plans from old jobs, roll all of those accounts over into an IRA. You’ll have more investment choices than 401(k) plans typically offer, you won’t need to worry about forgetting any past accounts, and you can more easily manage your asset allocation than if you have funds spread everywhere. 

And, while you want to have a separate savings and checking account, you don’t necessarily need to have them at different financial institutions. You can find a bank that offers a great savings account and a great checking account so you can move your money more seamlessly between them and check your balances by signing into just one account.  

While it is smart to keep savings separate for different goals, you also do not necessarily need entirely separate accounts to do that. Many great banks allow you to create “buckets” or categories within your account so you can earmark money for different things without maintaining multiple separate accounts. This is great because you can sign into one account but still track your progress toward your individual objectives. 

Choose the right credit card

Using a credit card to earn rewards is very smart. However, this can easily get out of hand. If you have multiple different credit cards and different rewards programs to manage, it can end up feeling like a full-time job to figure out which one to use in each different situation. You may also end up missing out if you use the wrong cards or don’t optimize your reward redemptions. 

Instead of trying to become an expert in the intricacies of card rewards programs, just make your life simple by choosing a great cashback card that offers the best return possible on all purchases. This way, you can swipe one card for every transaction and just opt to get a credit on your statement so you don’t have to think about how and when to use your rewards. 

Make effective use of apps

Finally, you can make effective use of apps to help you with the money management tasks you find the most difficult. There are apps like Monarch Money, Empower, and RocketMoney that allow you to link your accounts, track your spending, create customized budgets, and monitor your net worth. Some, like Empower, are free, but others like Monarch Money come at a small fee.

You can try out the different programs to see which ones are most effective based on your personal style, focusing on things like which program automatically imports and categorizes your transactions most effectively.

Once you have automated your finances and set up one of these apps, you can usually manage your money by opening up the app once a month or two, reviewing your statements to make sure everything looks right, and checking to see that your net worth is growing. You can take financial tasks from being a huge hassle to being something you hardly need to think about at all. 

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