5 Easy Ways You Can Simplify Your Finances & Improve Your Life Today
Simplify your finances in five easy steps.
I’m not a fan of the minutiae of your financial life.
(It’s okay, I’ll wait while you Google that word – that’s what I did five seconds earlier.)
If you’re someone with a full-time job, with a business, or with a passion project, you don’t need to get hung up on what the government said, what Marlou did with his face, or what Justin bought in Jollibee, just so you can “study” your finances and “evaluate” what these events mean to your money management habits.
“Oh my gosh, he bought a one-piece chickenjoy! Better buy Jollibee shares today at precisely 9:09 AM!”, you say, as you swipe your unpaid credit card for the third time today.
The point of this article is simple: getting better with your finances is simple.
And as much as possible, grow the gap.
As someone who wants to promote the idea of “Focused Living”, I need you to focus on these five things when you’re dealing with your money. Let’s start:
1. List down your Utility Bills.
When I say utility bills, this means your monthly payments for water, gas, electricity, internet and cable TV.
These are the services that you absolutely need to survive.
For me, it’s roughly:
◘ Water: P1,500
◘ Gas: P1,000
◘ Electricity: P2,500
◘ Internet: P1,300
◘ Cable TV: P800
I know what you’re thinking.
Why in Ragnarok’s name are you paying for cable TV, Lianne?
Short answer: It’s for my grandmother, Inang. You know what they say… A happy family = happy me.
2. Pay your Utility Bills at least one month in advance.
With the exception of your electricity and gas bill, you can take this moment to pay one month in advance for your bills.
Don’t know where to get this money from? Today’s your “Bonus week”, remember? If your list is like mine, you’d spend P3,600.
I’ve tried this before, and what they do is simply deduct what you’ve paid from your balance, so you’ll be one month ahead of your monthly payables.
There, don’t you feel accomplished already?
Don’t think of this as spending.
Think of this as buying another month of your freedom – no need to worry about more than half of your bills for a month!
3. Automate your savings and investments.
Automation works. One of my favorite bloggers, Ramit Sethi, said it best when he wrote:
(In a research study) Making 401(k) accounts opt-out instead of opt-in — in other words, making employees automatically participate, although they could stop at any time — raised contribution rates from less than 40% to nearly 100%.
The good news with this tip is you don’t actually need to be employed to do this.
As long as you have an online bank like BDO or BPI, you can automate your savings/investments, from my experience.
For BPI: Login to your account > Fund Transfer > Schedule Fund Transfer
It’s better if the account you’re transferring your money to is a bit inaccessible: don’t attach it to an ATM card.
I’m still praying for the day when we can do bank transfers from one bank to another. #SaTamangPanahon
The amount does not matter. It can be P50 monthly, if you want. What we want here is to automate your savings, set it and then forget it. Just remember it when emergencies such as sudden loss of job happens.
4. Use cash.
I have nothing against the use of credit cards.
In theory, it’s a great way to track your expenses and earn points. Cool, right? You’re spending and you’re earning airline miles at the same time!
From my personal experience, though, when I used credit cards, my personal expenses raised to almost 50%.
That’s right. I didn’t even realize it, until I actually sat down and tracked the figures.
What changed? I wasn’t popping bottles, buying bling-blings and buying tons of chocolate chip cookies, like all those rap lyrics say!
This means that if I were spending P10,000 monthly using cash…
It raised to P20,000 monthly just because I was using credit cards!
Yes, I could still pay the balance in full and on time.
But the idea of “focused living” was lost. I wasn’t spending money because I needed to – I was spending money just because it was convenient.
You may say: “Okay lang yan, Lianne. This purchase can help you earn points for free flights!”
But if I used cash, and became mindful of my own spending, I could have bought that flight on my own.
5. Buy based on your greatest need, not on the greatest discounts.
I don’t care if that brand new, neon orange, faux leather coat that used to be P3,000 is now P1,500.
Buying an item you don’t need, even if it’s 70% off, is still a 100% waste of your money.