Confused and stressed out about how to manage your money so you don't run out before payday? Put these seven easy moves into action, and you'll be well on your way to simplify your spending.
I know what you're thinking — "simplify" and "spending" in the same sentence? Ha! Like that's even possible when we have credit cards, debit cards, bank accounts, bills, bill pay, autopay, fees, penalties, interest rates and fees to keep track of. How can we possibly make managing money simple?
By having a plan. By choosing to hold ourselves accountable and then using every tactic possible to streamline and destress your approach to money.
When it comes to paying for things like groceries, gas and other daily routine items, there is nothing easier than paying with cash. You can't overdraft it, and you won't have to worry about fees and interest. Once it's spent, that's it. Done. So simple.
ORGANIZE WITH ENVELOPES
This is quite possibly the most effective money management technique. Get a stack of envelopes and label one for each of the ways you'll be spending your cash (food, gas and so on). Place the appropriate amount of cash in each envelope. There. You've got a spending plan. As a bonus, you'll have a handy place to keep the receipts from each of those categories. And they'll be neatly organized by category if you need to return something in the future or prepare your taxes.
Most retailers, including supermarkets and gas stations, offer some kind of gift card these days. Use them to simplify your finances. Let's say you intend to spend $400 for groceries this month. Buy a $400 gift card from your supermarket, and use it as you would a debit or credit card during the month. When you swipe it, the amount of that purchase will be deducted from the total prepaid amount available. You can't "borrow" money from a store gift card, and it's fee-free, too. If you stick with it, you're guaranteed to stay on a budget.
TRACK YOUR CHARGES
Whenever you use a credit or debit card, take 30 seconds to record that transaction in the same way you record the checks you write. Deduct the amount from the balance right away, even if you won't get that credit card statement until weeks from now. You spent the money, right? Don't fool yourself into thinking that money is still yours to spend until the statement arrives. Enter it in red ink now! Later, when your bank statement or credit card bill arrives, you'll be able to quickly double-check the red entries.
By putting your regular bills and payments on autopay, you eliminate that monthly decision: Should I pay bills tonight or wait until Tuesday? Should I put money into savings this month or buy those cute shoes?
An automatic bill payment is a money transfer from your account on a predetermined date or schedule to pay a recurring bill. Payments can be made from a checking account or credit card. They are usually set up with the company receiving the payment, though it's also possible to schedule automatic payments through a checking account's online bill paying service.
Go to your credit card issuer's and other lenders' websites to learn more.
Most households can operate just fine with one checking account and one savings account. If you have more, consolidate your various accounts into one checking account and one savings account. You'll simplify your banking big-time!
SHIFT TO ONLINE
Just living life these days can lead to piles of paper. Statements and notices from credit card issuers, utilities, insurance carriers, banks, brokerage accounts and so forth can morph into piles of paper. You may push them aside to read later, but in the meantime, all those piles can be super stressful.
Shift all of those accounts to online. Get rid of any paperwork that isn't absolutely necessary. Go to each of your providers and opt to go paperless where you receive statements and notifications online.
Mary invites questions, comments and tips at EverydayCheapskate.com, "Ask Mary a Question." This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of Debt-Proof Living, a personal finance member website and the author of the book Debt-Proof Living, Revell 2014. To find out more about Mary visit the Creators Syndicate webpage at www.creators.com.
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