How complex is your financial life?
By Kristin McGrath
October 11, 2013
I spent a lot of time debating getting a second credit card. It wasn’t because the credit line would tempt me. It was because I didn’t want another bill to worry about, another account to manage, another statement to check. In other words, I didn’t want to make my financial life more complex.
Still, you can only do so much to keep your finances simple. Having children, buying a home and owning a car all entail more financial obligations. In fact, at CreditCardGuide, our advice even seems to encourage a fair bit of financial complexity. We recommend having multiple bank accounts, including an emergency account, “fun” money accounts and even accounts designated for special events and goals. We also emphasize the importance of having a variety of credit cards to boost your credit score. And, if you want to put your money to work, don’t forget about rewards programs (the average American adult belongs than more than 20).
So, unless you’re an extreme downsizer, life today requires accumulating a daunting number of financial responsibilities.
Here’s how I keep all my financial obligations straight:
- I keep most of my bills off autopay: I’ve blogged in the past about how I’m wary of having too many bills on autopay. Right now, only the easy-to- forget, non-monthly bills (such as my car insurance, which I pay twice yearly) are set up to be paid automatically. At first, this may seem like I’m making my financial life even more complicated. Yet I’ve found that forcing myself to regularly look at certain bills and account balances gives me peace of mind. My finances always feel more complex when I don’t know exactly how much I owe on my credit card and how much my electric bill cost last month. Because I’m paying bills manually, that information is always fresh in my mind. I’ve looked it in the eye, and it seems more under control.
- I use apps for assistance: Mint’s app lets me call up a screen with all my accounts. I can scroll through and check balances without having to log into each one individually. Seeing all my accounts together makes having several accounts manageable — and it prevents me from forgetting the accounts I rarely use. Several months ago, I withdrew some money from my emergency savings to pay for car repairs. Because I scroll through my accounts almost day, the much-lower balance in the emergency account practically shouted, “Feed me!” on a daily basis until I was able to transfer more money in.
- I set up my phone to nag me: Before I got a smartphone, I marked up a paper calendar with all my financial obligations. Now, I let my phone remind me. I get a noisy, blinking reminder for rent and a reminder for each credit card bill, of course. But what this system is really great for is reminding me to check accounts that are so easy to forget — my 401(k) and my Roth IRA. Every month, my phone tells me to log in to those accounts — just to check on things and make sure I know my password. Twice a year, I get reminders to reconsider my 401(k) contribution amount and send a little money into my Roth. This prevents me from panicking upon realizing I haven’t checked my account in more than a year and scrambling to recover my password.
Taken as a whole, this system has me “visiting” all my accounts and bills regularly. That way, I never get the nagging stress of trying to remember to do something — or the sudden jolt of anxiety that comes with forgetting to do something. And my obligations, although numerous, never seem out of control.
Looking to simplify or take control of your complicated finances? The personal finance blogosphere is full of tips:
- Well Heeled Blog recommends paying down credit card balances and prepaying rent to simplify your finances.
- My 2 Cent Opinion argues that paring down the number of financial goals you have will make you more likely to tackle them.
- Man Vs. Debt suggests some radical changes for financial simplification geared at the downsizing crowd.
- Simple Financial Lifestyle lists some common financial stresses (“ugly ducklings”) — and explains how to streamline them into positive habits (“financial swans”).
- Reach Financial Independence has a game plan for tackling all those financial worries floating around in your brain.