Simplify Your Finances
In the real world, I manage a group of software developers. Prior to managing, I was a software developer myself. Software developers for all intent and purpose are engineers. Engineers like to solve complex problems with complex and elegant solutions. Doing so is in our nature.
What is interesting though, is through the years I have found the complex solutions are not the best solutions. While they make for great research papers and graduate thesis, they aren’t easy to support, maintain or enhance. They make it difficult for people to learn, and thus training of new developers is difficult and time consuming. Complex solutions cost more money in the long term than simple solutions.
I am a strong advocate of simplicity. I am not sure where I found this, but here’s my favorite definition of simplicity:
Simplicity is the art of maximizing the amount of work not done.
What I like about this definition is the focus on work, and it’s focus on doing less. Simplicity doesn’t mean cheap, sub-par, or quick and dirty. It just means focusing on doing the least amount of work and still meeting what is required.
Ok, so what does this have to do with finances you ask? Time is money right? Assuming you agree time equals opportunity for money than by maximizing the amount of work not done you get more time. Time to do things that bring in income, time to spend with your family, time to work on the house, etc.
I work diligently to simplify as much as I can in my life. It makes things easier and reduces stress. Here are a few ways I simplify my personal finances:
- Use online bill pay – I pay all of my bills online. I schedule the payments at the beginning of the month and I’m done. It takes all of 10 minutes to do this. No checkbook, no calculator, no stamps, paper cuts. It’s easy.
- Use Excel to manage my budget - I use a very simple excel spreadsheet to manage my budget and my expenses. Sure I could use Money or Quicken, but the spreadsheet loads fast, I keep it on my flashdrive so I can update it most anywhere, and it’s easy. Money and Quicken are great products, but they are fairly complex. I spend about 5-10 minutes everyday updating my expenses and budget categories.
- Use debit cards - I use my debit card for almost all purchases. Why? It’s easier to track. With cash I have to write down how I used it, with a debit card I just pull up online banking and there it is. The date, the amount and the merchant. Simple.
- Have Weekly Budget Meetings – My wife and I have weekly budget meetings. They last about 10 minutes and the purpose is to review the status of the budget so we both know where we stand. If we are over, we decide where to move the money from. If a large unexpected purchase comes up, we move money from the emergency fund.
- Don’t receive paper statements – I no longer receive paper statements unless I just don’t have another option. This keeps me from having to deal with extra mail, and from having to keep track of the statements. Moving to electronic statements also makes things cheaper for the company you are doing business with (meaning less cost to you) and is better for the environment.
- De-clutter - Clean out your files. Remove old statements, tax returns more than 7 years old, old checks, etc. Just the act of cleaning up and removing the clutter will simplify. It makes finding things easier, takes up less space, and makes you feel better. Better yet if you can find a few things to sell in the process, than maybe you can even pay off some of that debt, save a little extra, or buy a few stocks!
What do you do to Simplify your finances? What things are you doing today that you spend way too much time on that could be simplified? I challenge you to look for opportunities in your personal finances and in your life in general where you can simplify. After all, how can you turn down less stress and more time?