The Simple Life: 3 Tips for Simplifying Your Financial Life

If you sometimes feel like your financial life has too many moving parts, you may be looking for ways to get back to the basics—without letting anything slip through the cracks. Fortunately, simplifying your finances does not have to be a hassle. Here we discuss three simple ways you can streamline your financial life.

Automate Your Savings

When it comes to savings, good intentions can often go awry. You may intend to set aside part of each paycheck, but instead you find yourself spending this money on unexpected expenses or even on a splurge or two.

By making these savings automatic, it can be far less tempting to dip into them. If you have direct deposit, you may be able to have a portion of every paycheck deposited into a separate account. You can also set up automatic transfers to savings once your checking account balance reaches a certain threshold, or "round up" small purchases and place the difference in your savings. To make it even more difficult to transfer money out of your savings, you may want to open an online-only savings account that takes a couple of days to transfer funds to your other accounts.

Roll Over Any Orphan 401(k)s Into an IRA

Average Americans will have around 12 jobs over their lifetimes, which can often mean having multiple 401(k)s.¹ Some employer plans allow you to leave your funds in the account or cash out the account entirely, while some plan administrators work with you to roll these funds over into an IRA or a current 401(k) after you leave a job. If you are not proactive, your old 401(k)s will continue to sit and stagnate.

Rolling over your 401(k)s into another financial account can allow you greater control over your investments, while also giving you a way to easily see everything in one place. When you roll over a 401(k) into another qualified retirement plan, you do not need to pay income taxes or a penalty—the assets are not leaving the 401(k) structure. They are just being moved from one plan to another. And once the funds have been moved, you will be better able to ensure that your assets are invested according to your desired allocation and risk tolerance.

Automate Your Bills

Just as you can automate your savings by having funds automatically directed to other accounts, you can automate bill payments, as well. If you have regular, predictable bills—like a mortgage, rent payment, student loans, or a car payment—you can set them up to be paid automatically from your checking account. Just don't forget to mark the withdrawal dates on your calendar so you are not taken by surprise.

Automating irregular bills, like utilities, can be trickier. While you can still set these bills to be paid automatically, you will probably want to keep a small cushion in the account in case a particular bill is larger than expected.

Implementing these three simple steps can provide you with more control over your assets (including retirement assets) while spending far less time on the day-to-day grind of paying bills and shifting funds around.

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

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Footnote

¹ Average Number of Jobs in a Lifetime [2022], Zippa, ttps://www.zippia.com/advice/average-number-jobs-in-lifetime