How to Simplify Your Finances – 8 Easy Things You Can do This Week!

How to bring the benefits of KonMari & minimalism to help simplify your personal finances

Let’s learn about minimalism! Wait, what?!? I totally get the concept of “mental load” and if you’re a hard-working woman you do too! It speaks to me on a deep and very influential level.

Part of me thinks that my brain can’t handle ONE MORE THING! You too? Oh, and don’t forget all the “stuff”! With that, I am very much drawn to a minimalist approach to home and life. While I’m not a die-hard minimalist, I am getting better at paring down the excess, useless and cluttered every day. My finances and yours are no exception to decluttering! So let’s dive in on how you can start to simplify finances this week.

how to simplify your finances

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What is Financial Minimalism?

The minimalism lifestyle philosophy may seem like a scary concept to some; hearkening images of sleeping on a pallet, in a one-room apartment, eating beans. A.k.a. deprivation! No, that’s not it, not it at all!

To me, minimalism is being careful about what you bring into your life or allow to take up your time, energy, and space. Making sure that everything adds real value, and helps you live a full and meaningful life. The excess crap gets cut from your life, and you’re left with only what you really need and what brings you joy.

Scaling down your lifestyle, in addition to finances, can have some amazing benefits for you and your family. Some of the big picture benefits are less anxiety, less mind clutter, reduced depression, more family quality time, less stress on you, and the family, and so forth. There are tons of benefits, I couldn’t possibly list them all here. Google it; it’s a “thing”, I promise.

Minimalism is commonly aligned with frugalism, yet the initial desire to start is usually different: Minimal = living with less, while Frugal = not spending money. Financial minimalism doesn’t mean you have to be frugal, it may mean you simplify, but a lot of it will mean that you systematize it. So you do something once and reap the ongoing benefits. This is key to making your financial life easier!

Here are eight points to help you simplify finances, so it takes up less of your precious energy & brain real estate. Because once you do these, it’s smooth sailing as far as your To-Do list can see!

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The KonMari Method

By now, everyone has heard of Marie Kondo and her hugely popular books and Netflix series – Tidying Up With Marie Kondo. People have called her methods life-changing! Getting rid of the excess in your house and leaving only what sparks joy!

Paying bills may not “spark joy” but you can decrease the amount of time, paper clutter, and energy you spend around managing your money. So, in essence, we’ll apply her framework of getting rid of the unnecessary and keeping only what we must, for a simpler financial life!

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Tidying Up with Marie Kondo: The Book Collection:

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How to simplify finances

1. Get a snapshot of your entire financial life in one interface

Now that you’re onboard for minimalist finances one of the very best tools for you is Personal Capital! This interface lets you see all your accounts (checking account, savings account, credit cards, loans, investments, etc.) all in one spot.

With this, perspective is something we can all use a little bit of, so step back, and look at the big picture of your finances.

Personal Capital gives you performance metrics on your investment growth, or if you’re spending a lot more than you usually do. My favorite metric is seeing my net worth (it’s not a lot, but hey, it’s great to see progress)! The best is, is that it’s free. Just sign up, put in your account info in and go!

Now, I know some of you may be skittish about one place having all your info, fair enough. They have some of the strictest security standards and multilayered safety precautions in the industry.

2. Get all your logins & passwords together with LastPass.

Gather up all banking, investment, and credit card account login info and get on LastPass! This handy tool keeps all your login info on one site (yes it’s totally safe). All you have to do is remember your one main password to get access to everything. I just went into my account and counted up how many places I have logins for, and it’s 66!

How could someone ever be expected to remember those passwords (while not all being the same totally unsecure pet name of “Rover#1234”. All you need to do it’s open an account (there are paid and free versions), I use the free one, and its great! You download a browser extension for it and you’re all set, it takes care of everything else.

It’s a lot easier to handle your business when you’re not spending 15 minutes trying to remember which kids birthday you used as a password, or do the insanely frustrating retrieve password email cycle nightmare. This is a simplifying finances must do!

They did recently update their plans, and now you can only use LP on either a desktop or a mobile device, not both. Kind of a pain, but that’s life.

strive not to get more done, but to have less to do - francine jay quote

3. Simplify finances only using 1-2 payment methods

Now I know some of you are addicted to getting your points or 1% back or whatever on your eight credit cards. But are the “savings” really worth the hours and headache it takes you to track and reconcile everything? This step is key in simplifying your finances!

Keep or find the two best credit card reward programs and stick with them. Close the rest! Besides, how many times have you been lured by the call of “cardholders get an extra 10% off” sale at a store you don’t really need to spend money in. Kill the temptation and cut the card!

For myself and my family, we have three credit cards, but we only really use two.

USAA Limitless Cashback Rewards – it’s a flat 2.5% cashback on everything, no limits. Easy Peasy Lemon Squeezy! We use this one for almost everything.

Target RedCard – 5% off everything, plus extra coupons for account holders. Now, this isn’t the debit, nor is it the Visa, it’s the Target store-only card.

Capital One Savor Card – This one earns 4% back on dining, 2% at grocery stores and 1% on everything else. This is a confusing card, and I will admit that the only reason I got it was because it was offering a $500 signup bonus when you meet certain criteria. Once I reach the spend goal I will cancel it as it has a $95 annual fee after the first year.

Some people refer to this as bank card churning or farming. Basically just getting the card for the signup bonus. Please only consider this to make money if you have mastered your current system and have the time and focus on committing to doing this correctly. This process is NOT minimalism friendly, BUT you can make good money doing it if your credit score is decent enough. See Doctor of Credit for the pro at this practice.

By only having two credit cards it takes hardly any time to go through and figure out where the money went and from which account to pay from.

Yes, we have separate checking accounts for a few different main expenses; think Car, Vacation, House, etc. This is how we allocate our spending and save for big purchases.

4. Be a financial minimalist and freeze your credit

Remember a handful of years ago, when Target announced that they had been hacked and over 110 millions customers’ personal info of names and credit card numbers among other info was stolen. They ended up paying $18.5 million to over 47 states in that settlement.

People panicked, frantically worried over their compromised info for months, and some had to clean up a huge mess on their credit report. Data hacking continues to be an issue, companies like Marriot, Yahoo, eBay, and Equifax are among the most prominent victims of data breaches.

One of the main worries is that your information could be taken and fraudulent accounts are opened in your name, charged up, and not paid. The worst sinking feeling is when a person on the phone says you owe them tens of thousands of dollars for something you didn’t buy. But wait, you did, or at least your credit bought it. Cue: “oh fuuuuudge”, just like Ralphie from A Christmas Story.

So take most of the worry away and freeze your credit accounts. Then no one can open accounts in your name without first unfreezing them (with specific info and pins codes that should be known by only you).

You have to set up a freeze with each of the three main credit bureaus: Equifax, Trans Union, and Experian. Then you’ll set up an account freeze them, and be given (or choose) a pin that you need to keep as safe as can be! There has been some back and forth on charging for this service, max I have seen is $10. At least Equifax has now moved this service to be free. Just remember to unfreeze your accounts if you go to sign up for a new cc or to take out a loan.

5. Simplify your money by shredding it up & going digital

If you still get paper bank, credit card, or utility statements in the mail it’s time to KonMari it up and shred it and go paperless! Once you look over your bills and pay them then please shred it, (don’t throw it in the trash or the recycling!). Empty out all those file folders, boxes, and drawers and clear the clutter!

Now there are some financial documents you want to keep for a certain length of time. FINRA (the Financial Industry Regulatory Authority) says…

  • tax documents – 7 years
  • mortgage loan main docs – keep until pay off the loan
  • investment statements – keep until you get the annual statement and then shred monthly (if you don’t have online statements)

Find the full list of docs and suggested keep dates see FINRA’s full article.

6. Embrace financial minimalism and pick an uncomplicated investment strategy

This is a big one in having peace of mind so listen up. It seems that everyone has the best way for you to invest your money, with the invest now or lose millions of future dollars scare tactics. Or the comical guaranteed 12% return on investment line.

No! There are NO guarantees for investing in the stock market. But if you want to keep a step ahead of inflation you must invest your money. Do yourself a favor and pick a strategy (and yes you MUST have a strategy) that you can live with comfortably and for the long haul.

For the sake of simplicity and common sense, I have chosen to follow the basic financial planning strategy laid on in JL Collins’ book The Simple Path to Wealth. Now, this is not a get rich quick scheme, it is precisely the opposite. It’s the slow and steady wins the race approach. This book has a cult following among FI enthusiasts because it’s a no-nonsense and very realistic approach to investing. It checks all the boxes for long term wealth building!

If you’re interested in this easy but very effective strategy and want a humorous read here is his book The Simple Path to Wealth.

My personal strategy for a minimalist investment approach

I have a low-key money management style, and I personally invest my money in INDEX funds that match the market. It gets invested and then I leave it in there, forever! I don’t waste my time or energy following market surges or crashes, and I don’t second guess my investments. In fact, all I do is… nothing. My contributions are automatically transferred every month and that’s it.

This framework leads to significant returns over the long haul. With part of the strategy involving growth with compound interest.

Financial guru Warren Buffet (he’s kind of a big deal, with a net worth currently rumored to be $80 billion) believes in it too. He stated that upon his death, he wants his wife to follow to buy & hold investment strategy. To put her money in an S&P 500 stock INDEX. I’ll absolutely take his advice as a pseudo financial advisor!

If it’s good enough for his wife then it’s good enough for me. Please note that I am not a certified financial planner, nor should you take my plan to be your plan, as everyone’s situation is different. This is the quintessential tip on making it easy on yourself and simplifying your finances!

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7. Consolidate your accounts

If you’re like most Americans you have worked in a few different places over your career, and that means you probably have some random 401(k) retirement accounts around, probably with a few different financial firms. It’s time to roll them all together for simplicity sake.

You can easily roll all your accounts into a single account, just do a rollover into an IRA retirement account with your financial institution of choice. Vanguard, Fidelity, Charles Schwab are all great choices or try ETRADE which makes it super easy.

Doing this makes it easier to manage, and you get more options and control of how you want your money invested. As company-sponsored retirement plans can be limited in choice options, or have a bad fee structure.

In fact while you’re there, go ahead and set up a small automatic payment from your bank account to continue funding this account. A little cash flow injection can jump-start a stagnant balance.

You should be mindful of your asset allocation and go into something that balances your existing holdings. So look at what you have now, and then buy something a bit different; say mutual funds, bonds & CD’s, ETF’s, etc.

8. Clearly define your financial goals

It goes without saying, that if you don’t know where you want to go, you will never get there. The same is true with our financial goals.

Do a brain dump of everything you “want” to achieve. Things like…

  • have a full emergency fund
  • get rid of all your high-interest rate debt (i.e. credit card debt)
  • reach your savings goals of $_____.
  • invest 30% of your pay
  • embrace financial independence and retire by 45
  • payoff your student loan
  • have a credit score of 825

Those are just some common goals that people have. Do you know yours? If not then take an afternoon and make a financial plan for your money.

Pick your top 2-3 financial goals and create an action plan on how you are going to reach those goals. Don’t spread yourself too thin by trying to do it all now, things can wait their turn.

At the end of the day

Now, this isn’t a fully exhaustive list of personal finance tips and the concept of minimalism. But this is a great start to simplifying life, and helping you spend less time and energy on paperwork and boring bill pay.

Yet most importantly, free up all those brain cells for more enjoyable tasks. Or better yet for those big creative projects that you’ve been eager to get to. Because your financial life is on autopilot so to say, you just get to enjoy it now!

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How are you going to simplify finances?

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  1. I consider myself a minimalist in regards to our home, my wardrobe, etc but haven’t really considered it with finances. I love the Last Pass suggestion and the slow index fund investment plan.

  2. I LOVE the idea of applying minimalism to financial management. I’m like you, I get rid of the clutter and love the idea of minimalism but I still have stuff in my house. LOL! Thank you for breaking down how to minimize all the mental load that goes with managing finances and keeping a budget!

  3. You offer so many valuable tips on using the Konmari method to declutter finances. My favorites were using Lastpass and reducing credit cards.

  4. Great post! I will need to check out that investment book! Your freeze me credit accounts tip is soooo smart!! Going to do that this week!

  5. Being a minimslist with finances has always been a a sour spot for me. We have a love hate relationship. I will see if these tips will help me. Thanks for sharing.

  6. I often struggle to find good list to help with finances! Thank you for this great list to help you measure finances and helps you live a minimalist life style.

  7. I love the idea of using minimalism for your finances! This is something I could work on for my own finances. The freezing credit is a great idea-I’ve never heard of that before!

    1. freezing my credit has been great! I never really need to worry about identity theft, especially when big companies have data breaches. Peace of mind is priceless!

  8. Omg I so agree – I’m not even minimalist and for my finances I have to be or I’m all over the place!
    I don’t understand how people w more than 1 credit card do it – I’d be overwhelmed lol

    1. The paperwork that comes with finances can be totally overwhelming! Plus all the due dates, minimum payments, fees, etc. OH MY!