Simplify your financial life

One of the best strategies that I have followed in order to take control of my money is to make things as simple as possible.

I have a super light-weight and skinny wallet and in it is all I need. If it doesn’t fit in there then I clearly don’t need it. I do have a few more cards which I cannot get rid of, but I keep them aside and only carry them with me when I specifically need them.

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Simplify your financial life with these 4 easy steps:

One Credit Card

I only have 1 credit card. This was not always the case. I think I had 3 at one point.

Think about how confusing it is to know what you can spend on which card because each has a different limit and payment cycle. And then of course, it is obviously far too easy to spend too much! Having all these cards available is just so tempting!

PS: Keep the limit low

I have set my credit limit far lower than what the bank has offered me and each year when they offer to increase it I simply decline.

This gives me peace of mind that my spending is in control. If I need a lot of money quickly I have an emergency fund available, or if it is a planned expense I simply transfer extra saved money to my card.

One Loyalty Program

Most stores, banks, credit cards, etc all offer their own loyalty program. These either come with plastic cards, apps or electronic cards to add on your phone. It’s great that they offer discounts and tailored offerings; but it does add a bit of complication to life.

I have chosen a loyalty program linked to my credit card and that is the only program I have signed up for. I may be losing out on savings at some places, but lumping all your “loyalty” into one scheme means bigger benefits on that specific program.

Whatever program or scheme you choose, just keep it simple and easy to manage. If you want to have multiple programs then at least do the challenge at the end of the article.

One Bank Account

I actually have a few bank accounts but my bank offers 1 main account and 4 linked accounts all for one very low monthly fee. On my baking app the accounts are are linked so it’s super easy to manage. I use these accounts for different savings.

It may sound as though I am ignoring my own advice, but I consider my linked accounts as “one” because they are so easy to manage and they incur no additional fees or admin.

The problem with having multiple accounts at various banks is that they generally come with an ATM card, an optional cheque book, monthly statements, monthly fees, marketing emails, etc. Having multiple accounts just means that there is more to keep track of. You may have valid reasons for multiple accounts, and that of course is fine. As long as you have a plan and know why you have the extra accounts. As mentioned throughout, just keep things simple.

One Simple Budget

It’s easy to get excited about one’s budget and to add all sorts of confusing details. It’s not bad to have a detailed budget, but you also need an easy-to-remember summarized version.

I like to keep my budget really simply with no more than 10 categories and within that I know what is paid for by electronic bank transfers or debit orders, what goes on my credit card and what is cash.

Because the budget categories are so broad it is easy to remember.

I also have a “general” category on my credit card budget for all expenses that I have not catered for specifically. These vary every month but as long as I stay within my overall spend I am happy.

Bottom line is to keep things as simple as possible. Close redundant bank accounts, credit cards, debit cards, store cards, etc.

Challenge

Jot down all the bank accounts, store cards, credit cards, debit cards, ATM cards, membership cards, loyalty cards, etc that you have. Also look for the electronic ones you have.

Look at what monetary value they have added to you over the past year, and decide whether you really need it. If not, you know what to do…

 

Grocery shopping like a pro

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Want to make your money stretch?

Want to be sure that you’re getting the most for your money?

Want to spend less time in the store?

Use these 6 tips to make the best of your time and money when grocery shopping:

1 – Know your budget

The first and most important point is to have a budget! If you don’t have one yet then you may want to start by taking the 30-challenge of tracking your everyday expenses. This will give you a good idea of where and how you’re currently spending your money. This is a great way to start your budget.

If you already have a budget; well-done!

2 – Make a list

Having a shopping list will not only clear your mind and take the “I’m forgetting something” feeling away, it can also speed up your shopping. You can keep a list on your fridge or on your phone and add to whenever you find you need something. Then, before your next shop, read it through and add any extra items you need. Be like Santa and check your list twice.

If you are doing a big shopping spree then categorize your groceries by the following (or something similar that works for you):

  • Fruit & Veg (fresh fruit, vegetables, herbs)
  • Frozen goods (anything in the freezers)
  • Dairy (any dairy goods)
  • Meat (if you eat it)
  • Dry goods / Other (tins, spices, bread, juices and anything that you would store in your cupboard at home)
  • Toiletries (not really groceries but needed)
  • Cleaning products

Generally stores keep similar type items together and if you have a list of what you need from each area it saves you from walking around the store several times. You can categorize your items in whatever way makes the most sense to you, but don’t make your system too complicated as you probably won’t keep it up then.

3 – Don’t shop when you are hungry

If you’re hungry you’ll probably pick things off the shelf that you want to eat now! You’ll also over-cater for your next meal as your poor starving brain cannot deal with the sight of all the food. Another concern is that if you are really hungry and feeling that your blood sugar is low, then you will most likely rush to get through your shopping as quickly as possible. Saving money and sticking to a budget will be your lowest priority. Hangry is a real word!

Keep yourself from temptation and rather delay your shopping trip if you’re hungry.

4 – Check prices per unit

Stores change their prices often and we’re conditioned to think that the larger quantity “bulk buying” is always cheaper. Well, it isn’t! Don’t assume something is cheaper just because it’s in a bigger box or because the packaging tells you to “buy in bulk and save”. Always check the price per unit. Not all stores display the “per unit” price but that’s when you need to take out a calculator and work out which size is best to buy.

5 – Use cash

If you only take cash to the store and no credit or debit cards then you really have no option to spend too much. The embarrassment of not having enough money will surely drive even the most out of control shopper to calculate exactly what they have in their trolley. It’s amazing how good you become at shopping when you only have a set amount of cash and no more.

6 – Join the store loyalty program

Most stores have a loyalty card (points card) of some variety. The savings vary but if you shop at the same store often then it is worth joining their program and using whatever savings are offered to you.

Be aware of the marketing though and remember that they will try to entice you to spend more. So remember your budget and shopping list and don’t be tempted to veer off.

 

Have an Emergency fund

It’s always a good idea to have an Emegency Fund available where you can quickly access money. You never know when something is going to happen. Think of how you would cope with a car service which costs 3-times what you expected, or if you needed to be admitted to hospital but your medical insurance requires you to pay upfront. Perhaps your washing machine suddenly stops working, or a power failure causes everything in your freezer to go bad. You could even have your credit card blocked and be in a difficult spot for a few days.

It’s just useful knowing that you have something saved for that rainy day. And, it is a great stress relief knowing that you are sorted for emergencies.

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How much do you need?

Circumstances are different for everyone so you need to make this decision yourself. Think about things that may have happened in the past where you suddenly needed extra money. Also think about things that could happen.

This is certainly not an exact science, rather just a ball-park figure which would make you feel comfortable and less stressed. Having something is better than nothing, so if you really can’t figure out how much to aim for, just set a low limit and see how it goes.

Type of account?

The three important factors about the account you use for this Emergency Fund are:

The purpose of an Emergency Fund is that you can access the money immediately. Anytime, day-or-night. Imagine needing to draw cash at at ATM at 2am – would you be able do so? Even if it involved using your online banking to transfer money between accounts; as long as it can be done quickly.

If you have a home loan from a bank, it could be very helpful to stash this extra cash in that account. Provided of course that the home loan account allows for withdrawals or transfers. Doing this would allow you to save interest on your debt, and this is often high. If you’re not sure contact your financial institution.

Have you considered keeping all your savings in one account and simply tracking the various goals in a spreadsheet? Have a look at how to use Savings Pockets to simplify your life.

How to start?

The best way to start anything is just to start! You don’t need to have enough money or know exactly what you’re doing before you start; just make the conscious decision. A few guidelines though would be:-

  1. Decide on your number. How much would you like to have saved in this fund?
  2. Decide which bank account to save it in – investigate the options but remember to keep your life (and admin) as simple as possible.
  3. Create a budget if you haven’t already.
  4. Set yourself a goal to save the necessary funds.

Once you have started you will see that circumstances may change, or you may need to use your fund sooner than expected. That is all fine, just relook at this often and be sure to be working towards this.

Why Save?

This site is all about saving, budgeting and in general taking charge of your money. But saving is hard and requires you to make sacrifices. Is it really worth the effort? You might think that it’s silly to work so hard and then not spend your money; surely that’s why you work and earn money in the first place!

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Well, to start with, you need to find balance as you do need to enjoy life and spend money on things that can bring you joy. You need to spend time with loved ones and have fun. There is an old saying “all work and no play makes Jack a dull boy”. We don’t want to become dull (and possibly cantankerous) simply because we focus so hard on saving that we forget how to live. To help you find this balance you definitely need to create a budget and a plan.

There is of course the concept of “living for today and enjoying each day to its fullest” but at the same time we need to look at “the bigger picture”. Saving is your tool to reach your goals and dreams. This is something that is completely in your control and the amount you save, the goals you make and the success is all up to you!

Many people feel that they simply don’t earn enough in order to reach any goals and thus don’t even bother trying. If you seriously look at what you earn and what you spend, you may find that there is actually more than you think. Unless you can find a way to earn more money, you should certainly be looking at where your money is disappearing to.

Here are some reasons why you should save (make your own list of keywords to get you started).

  • Better retirement plan
  • Less stress knowing that you have some money saved in the bank
  • A debt-free (thus stress free) life
  • Your children’s education
  • Your dream trip overseas
  • Your health (being able to afford better choices)

Why not start right away with your first goal?

Pay yourself first

This is one of those things that you’ve probably heard many times before and you know you should do it, but most likely you don’t. So let’s look at what is meant by paying yourself first, and how it will help you save.

To pay yourself first really means that once you have set up a monthly budget and worked out how much you can save each month, then you should transfer that amount into a savings pocket immediately after being paid. If your bank allows, you can set up a recurring payment to transfer the money each month.

We’re used to setting up payments for accounts and debt repayments, but we seldom take our savings “payment” seriously. You should think of this as another account that you have to pay.

The advantage of transferring the savings amount out to a Savings Pocket immediately is that you cannot be tempted to spend it. You can’t spend what you don’t have (well you can with a credit card but that is a discipline you need to solve for yourself)

Challenge

Work out how much you can save (either actual savings or extra payments towards debt) and set up an automatic payment now to transfer this money. If you’re not sure how to create a budget, read this blog.

Manage your credit card spending

Managing your credit card spend and keeping it within your monthly budget can be a bit tricky. The reason is that we budget for a calendar month, but our credit card statement generally happens at a random mid-month date. My credit card statement cycle is from the 8th of each month to the 8th of the next, but my payment must always be made by the 3rd. Now that’s just confusing!

It would make so much more sense if the statement cycle just ran over a normal month so that we could easily track our spending. But this way, the banks keep us confused and we just keep spending money never really being in control.

Let’s take a closer look at the issue and I’ll show you how to stay in control with just a very simple calculation. It will just take a few minutes of admin and a weekly checkup on your statement to make sure you know what’s happening.

Step 1:

Make sure that you can easily access your statement whenever you want. You can probably do this online, via an app or possibly even some texting service. However you do it, be sure that you’re set up as you will want to check your balance weekly.

Step 2:

  • Set a few reminders on your phone
  • 1st of every month – check your balance
  • Set up a monthly reminder to pay your card balance on the same date each month
  • Set reminders for the 7th, 14th, 21st and 28th to just check-up on your balance (it will soon become a natural habit to do this, but reminders will help in the beginning)

Step 3:

Create a spreadsheet similar to this. My calculations assume that I make a payment near the end of each month, so you must just take into account when you make a payment.

Manage CC
Zoom in if you can’t read the notes

You need to know what the starting balance on your account is. This is how much money you can spend. Then, enter the amount that you budgeted for your credit card spend.

The payment due amount will only be known later in the month, and the real final balance obviously only at the end of the month.

Because my monthly payment happens near the end of the month, my weekly check-points are simply the opening balance less a quarter of my budgeted spending. These figures are just rough estimates to what my account balance should be and if there is a major discrepancy I can always look at the transaction details.

The Predicted Month end balance is the Starting Balance less spending plus the payment made into the account.

All it takes to track your spending is a weekly check-up of your balance to see that you are on track.

Don’t let the banks mid-month statements confuse you, take charge of your money!

Budget by payment forms

As with your simple budget, there is no generic solution to understanding how you spend your money. We all have different spending habits and ways that we understand our money.

Something I find useful though is to know how much money is spent via automatic payments from my account, how much money I spend as Cash, and how much on my Credit Card. You of course may have multiple credit cards or store cards and if that’s the case it will be very difficult (if not impossible) to budget spending per card. If you have multiple cards then you really need to ask yourself whether you need them all, and if not, start cancelling them. One tip I can give with absolute confidence is that if you want to be in control of your money, you need to keep things simple!

Basic Budget 2

In this example I have simply indicated which categories are paid via Automated Electronic payment, by Cash & by my single Credit Card. In reality, your spending will never be exact, and unplanned things happen. That is fine, as long as you know what your plan is, and can identify where and why things have changed.

The advantage with categorizing spending by type is that you can actually draw the cash you need for the month upfront and you can also keep track of your credit card expenses as you know what is budgeted for your card. When doing this exercise though, have a look at the advantages of using cash and consider using cash for more of your spending.

This is just another way to understand what you are spending money on, and how. Take this concept and make it work for you with your specific circumstances.

As always, take charge of your money!