Eight Ways To Simplify Your Finances

The world revolves around money, and while you can save money by living a simple life, it also costs money. How much money do you need to live a simple life? Unfortunately, there is no simple answer to this question because every family’s goals, dreams, and needs differ. However, I can share how my husband and I simplified our finances on a fixed income without using credit cards.

 A little backstory, my life wasn’t always simple. Less than a decade ago, I was exhausted and burned out from living a life of “keeping up with the Joneses.” We had a ridiculous mortgage and even more ridiculous vehicle payments. We were not living within our means, and our credit cards were maxed. I’m not talking 5, 10, or even 15k credit cards; I’m talking 30 to 40k on each card.

It wasn’t until my mental health declined in 2013 that I realized I needed a change… and fast. Instead of wanting a life of convenience and measuring success with material items, I dreamed of financial freedom and simplicity.  So, my husband and I quit our jobs, sold our suburban home, and bought a small farm out in the country.  We downsized, simplified our finances, and worked our asses to pay off all our credit card debt.

Now, how the heck did we do that on a fixed income?

• We don’t go out to eat; if we do, it’s McDonald’s or Chick-fil-A twice a month.

• We don’t take vacations. Not because we can’t afford it, but my husband and I take care of the farm, and honestly, we don’t have anyone we trust enough to take care of our animals, and we don’t miss going on vacation. It is nice to take a day trip occasionally to get a little break from all our farm responsibilities, but for the most part, we are happy staying at home on the farm.

• We don’t have children. Not for any particular reason, we are simply content with raising animals, and we haven’t had the desire to have any kids.

• We don’t use credit cards (anymore). After we paid off 70k in credit card debt a few years back, we cut them up and refused to start down that path again. For us, having credit cards was too tempting, and paying off credit card debt is hard if you can’t stick to a budget or system.

• We have a budget, and we stick to it. We receive disability retirement for injuries that occurred during military service, so we receive the same amount of money each month. We pay all our bills on the first of the month and have a budget for feed supplies, groceries, utilities, vet bills, gas, etc. We still splurge now and then, and if there’s something we want, we save up and pay for it in cash.

• We live below our means. After years of living paycheck to paycheck and constantly being stressed about money, we stay below budget and regularly put money in our savings accounts. Unexpected expenses will always come up, and we like to be prepared as much as possible.

When it comes to simple living, simplifying your spending habits is an important step. Learning to give up some of the comforts of your life, like taking vacations, or going out to eat, can be challenging for many people. To me, simplifying your finances means being more intentional with what you spend your money on, so you can live more simply. If you want to live a simpler life, then you should be willing to sacrifice some of your comforts. That’s because many ways to save money without cutting back on your lifestyle. For example, if you want to save money, you could stop buying expensive coffees at Starbucks every morning. Or, you could skip one night out per month instead of two. These are simple changes that can add up to significant savings.

Sit down and figure out what you truly value. What’s important to you? Do you care about having a nice car, or would you be perfectly happy living in a tiny apartment? Once you’ve figured out what matters most to you, you’ll know exactly where to cut back.

Here are eight helpful tips for simplifying your finances:

1. Set up automatic bill payments and eliminate all that paperwork. Setting up your bills automatically to be taken out of your account can save you time and stress every month. Our lives are busy enough, so anything we can do to lessen the amount of stress we deal with is helpful. Not to mention less paperwork to clutter up your desks or, if you’re like me, your kitchen counters.

2. Cut back your credit card usage. Credit cards can be beneficial but also detrimental to your finances. On the one hand, they can help you build credit, but they can also hurt your credit if you are not responsible for them or use too many. You can simplify your finances by considering debt consolidation. Debt consolidation will roll all of your credit card accounts into one payment, which can help you pay off your debt sooner and with lower interest rates.

3. Focus on one financial goal at a time. It’s common for people to juggle paying down debt, building an emergency fund, saving for retirement, coming up with a down payment, college, weddings, kids…  ugh.  Instead of trying to do it all, try focusing on one goal at a time.  If you’re attacking debt, attack debt.  If you’re saving for a down payment, save as much as possible.  Simplify, focus, and prioritize.  Once you knock out one financial goal, you can move on to the next one.

4. Track how much you spend. Keep a small notebook with you always and write down everything you spend, and I mean everything. Do this for several weeks at least, then sit down and go over all your expenses. Is there a pattern? What can you cut out? What can you cut back on?

5. Pay off debt. If you’re carrying debt, you need to pay off as much of it as possible. This will not only free up money for other things, but it will also make you feel better about yourself. You should be able to live comfortably without having to worry about paying off debts. The sooner you pay off your debts, the faster you’ll reach financial freedom.

6. Pay cash whenever possible. When you pay with the money you’ve budgeted for purchases, it’s easier to track exactly how you spend your money and to simplify your finances. It’s also an eye opener and keeps you in reality as to how much cash is going out vs. coming in from week to week or month to month.

7. Close old accounts. Closing old accounts is another way to simplify your finances. That includes old bank accounts, as well as retirement accounts. Instead, roll over your IRA or 401(k) into one account that you can keep track of.

8. Start with a budget. A budget is an essential part of any plan to simplify your finances. It would help if you started by creating a monthly budget based on what you spend each month. Once you’ve created a budget, you’ll be able to figure out what’s important to you and what isn’t. You’ll know exactly what you can afford to spend on and what you can live without.

It’s essential to find the simple tips that work the best for you and your family. Managing your money doesn’t have to be stressful or daunting. By simplifying your finances, consolidating your accounts, paying off debt, and automating your bills, you will know precisely your financial situation at any given time.

I hope these tips have helped you learn how to simplify your finances and save money.

All the best in your journey to simplicity!

xo, Jen