Bryan Link, CEO of SimpliFi suggests what people can do now to simplify their finances this year. What is Simplifi? Simplifi is a personal finance advice website.
- Develop a financial plan that maps out your financial goals! If you put together a written financial plan, you increase your chances of achieving your goals by 250%, so this is the best place to start.
- Develop a monthly spending plan that can help you achieve your financial goals–both short and long-term. Knowing how your going to spend your money before you do it is the key to financial success.
- Set up automatic withdrawals for your savings and investment accounts, and have them hit at the first of the month (or whenever you get paid). This “pay yourself first” approach is really the only effective way to enforce savings discipline. If you wait until the end of the month to save, you’ll find there’s never any money left.
- Use cash for discretionary purchases like drinks/snacks, entertainment, and low-cost dining. Studies have shown that we have a harder time parting with cash, so if you force yourself to use cash for these purchases, you will spend less. EVEN BETTER: use the envelope method in conjunction with your monthly spending plan for these purchases. It works like this– budget a specific weekly amount of cash for these purchases, then each week, withdraw that amount, put it in an envelope, and only use what’s in the envelope for that week. When the cash is gone, no more spending until the next installment!
- Increase your giving to a charity that helps those less fortunate–and find a way to volunteer there as well. Both of these actions will increase your happiness and make you feel more grateful for the blessings you have in your life.