You can take three easy steps and vastly simplify your life. You'll have less stress and more time. You'll also have more money in your pocket and more spring in your step. The nice part is that you can accomplish all this without spending a dime. Have I got your interest yet? Good. Let's get to work.
I am a huge fan of automating as much of my financial life as possible. That is even truer when it comes to banking. I strongly suggest that you use banks that allow you to pay all your bills through a bill pay service. If you have a concern about security, I understand, but my experience is that the concern is really unfounded. I pay all my bills online and I never go to a branch, and I've never had a problem.
If you want to take this up a notch, I suggest you consider using an online bank like Perkstreet (but there are several alternatives). These are FDIC-insured institutions but because they don't have the expense of operating physical branches, they pay more interest, have far better service, and usually offer juicy rewards programs. When is the last time your bank gave you rewards points for using a debit card? Try never.
The nice thing about an online bank is that it forces you to become very efficient. You can't waste any time in branches, since they don't have any. How much time did you waste with bill paying and going to the bank last month? Now think of what you could do with all the time you'll save.
I am a big fan of using spending tracking software, but you don't have to if you don't want to. I do want you to know what it costs you to live every month, but you can accomplish that by simply looking at your bank statement. That's right. Your monthly bank statement tells you exactly what it costs you to live every month. That's because included in your bank statement is a number that sums up your total withdrawals. Guess what? That's how much you spent and that's what it costs you to live.
Granted, some months with be higher than others. That's why I suggest you take a spreadsheet and record the total withdrawals from your bank each month and create an average.
When you know what it costs you to live, you can plan for your retirement. But without that information you can't possibly plan ahead. Use this system to track your spending. It will take about five minutes a month to do and you'll be miles ahead of just about everyone else you know.
3. Financial Plan
Most people who create financial plans don't get any value out of them. That's because they are too complicated and they are built on too many assumptions about the future. Forget it. Waste of money. Instead, you can figure out how much you need to retire and run a very basic projection. There are quite a few free resources on the internet that will help you determine how much you need to save in order to retire.
Once you have that number, save that amount before you do anything else. If you go this route, you don't even need to budget or track your spending. Let me illustrate. Say you need to save $1,000 a month to retire. In that case, just do whatever you have to do in order to achieve that goal. If it means getting a part time job, get a part time job. If it means cutting your spending, start cutting. It's pretty simple. Just hit your savings goal and spend away everything above that if you want to. Don't worry about it.
Your financial future is very much in your own hands. And your financial life doesn't have to be complicated or time consuming. What have you done to simplify and enhance your life?
Neal Frankle is a Certified Financial Planner and owner of WealthPilgrim.com -- an extremely popular personal finance blog.
- Banking & Budgeting