Simplify Your Life: Finances

1. AUTOMATE YOUR FINANCES

I should mention that I don’t do this because I am one of those paranoid people that NEEDS to know what amount I’m paying before I pay it.

I also have had an issue in the past with a company charging more than they should’ve, which is annoying to try and reverse.

But aside from that, many people swear by setting up automatic bill payments, and never having to worry about remembering to pay each and every little bill.

That said, don’t forget to keep a healthy buffer in the account just in case they take out more than they should.

2. CONSOLIDATE YOUR BANK ACCOUNTS

I am a huge fan of not having to log into 50 banks to check all your balances.

Here’s my setup:

• 1 emergency fund account for high interest savings (ING Direct)*
• 1 personal chequing/savings account (PC Financial in Canada)
• 1 business chequing account (TD Bank)
• 1 Registered Retirement Savings Plan (RRSP) account (TD Bank)**
• 1 Tax-Free Savings Account (TFSA) stock trading account (Questrade)**

*I  would have consolidated with my regular personal chequing account but ING Direct was offering a better interest rate.

If you are in Canada and decide to sign up for ING Direct, if you use my ING Direct Orange Key, we will each get $25!

ING Direct Orange Key: 32726976S1

**TD Bank doesn’t let you trade stocks as cheaply or as easily as Questrade, but I started with them and I just invest in their index funds.

If you are in Canada and decide to sign up for a TFSA with Questrade using my affiliate ID we will each get $50!

Questrade Referral ID: o0soehds

3. SIMPLE BUDGETING AND EXPENSE TRACKING

Don’t make it difficult on yourself and be in the dark about your finances. It only causes more confusion that builds on top of each other, and in the end it becomes a big, tangled mess if you don’t deal with it.

Set up a budget, track your expenses, analyse your spending, and make improvements/changes.

Wash. Rinse. Repeat.

I made my own Excel budgeting and tracking analysis sheet, and I’ve been using it since I was $60,000 in debt, and it has really made a difference.

The general rule is as follows: The less you spend, the less you will have to worry about but you can’t possibly know how much you need to cut back until you take some statistics and see the hard numbers.

Need some help? Here are my best posts about $$$$$$ (money) on Fabulously Broke in the City.

You can also use online services like Mint that link to your bank accounts, but being a Paranoid Penny, I avoid letting anyone (or any company) have any knowledge of my bank numbers or passwords, even if it makes things “easier”.

4. KEEP 1-2 CREDIT CARDS NOT 15, AND USE THEM WISELY

This is hard if you have debt and are trying to pay off each card as you go, but if you can do so, consolidate your cards onto one with the lowest interest rate.

You will not only save money, but you can see ONE card with ONE payment you need to make each month.

I keep 2 cards: one for personal and one for business.

I rarely use the one for business, it’s mostly for the insurance available on it if I need it.

I earn points on my personal one, and I use it for almost every purchase I make. I get $20 for every $2000 I spend, which is a 1% return for purchases I’d make anyway.

Then for every purchase I make, I make an immediate payment online for the amount.

E.g. if I spent $5.51, I go online and pay $5.51.

This helps with reconciliation at the end of the month, I can match the expenses with the payments and see what I missed or overpaid.

If you are thinking of playing the credit card balance transfer game to get better interest rates, reconsider your decision because it could be more trouble than it is worth.

Don’t spread your purchases around by charging one card, then another for different points or rewards programs.

The best strategy is just to pick ONE card and spend on it to get the maximum cash back or points, and be done with it.

5. USE CASH OR DEBIT ONLY

If you want to go uber simple (or perhaps don’t trust yourself with credit cards), then use cash or debt only.

BF employs this strategy. He doesn’t care about points, but he did sort of switch over to my method of using my credit card to pay for everything because he saw how fast our hotel and travel expenses were adding up to give us free groceries

6. STAY ORGANIZED WITH YOUR TAX RECEIPTS

If you need to claim any receipts for your upcoming taxes, then get a little accordion folder, label it as the tax year it is for, and each tab with names like Medical, Childcare and so on, and every time you get a receipt, throw it in there.

When tax time rolls around, guess who will be ahead of the game? YOU!!!

If you want to be even more organized, keep an Excel sheet with a list of the categories of receipts you need to claim, the dates of each receipt and the amounts.

When tax time comes around, you just do a little Excel addition and sum up the amounts in each category to get the exact amounts you need to type into your software (or write onto the papers) to claim. And if you want to get ahead of the game, you can e-file as soon as your tax forms come in. The quicker you get your returns out, the quicker they come back!

It could NOT be easier, trust me.

END OF THE SIMPLIFYING YOUR LIFE SERIES

And thus concludes the series on Simplifying Your Life. I hope you enjoyed it, and please leave comments with tips so that other readers can learn even more!

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