THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE READ MY DISCLOSURE FOR MORE INFO.
One of the biggest gripes that I hear from people is that they have too many accounts and can’t keep track of everything. Before I set up my Personal Capital account, I utilized an Excel spreadsheet that was complicated and tedious. It took way too much time to maintain it. I had to sift through paperwork to regularly update the figures. Let me tell you– I am so thankful not to have to do that anymore.
While it may seem daunting, bulletproofing your finances should take you no more than 45 minutes, depending on the number of accounts you have, during the initial set up. After that, to maintain your finances, it should take no more than 20 minutes per month after that.
1. Set up a Personal Capital Account
Time to set up: 15 minutes
Maintenance: 2 minutes
One of the best things that I ever did was set up a Personal Capital account. You can read my review here. Swapping my excel spreadsheet for a Personal Capital account was a game changer for me.
With all of my accounts aggregated in one place, I am able to review it all from there. I can ensure that there is no fraud and that I am happy with my asset allocations. If I’m not, I can easily make any alterations.
2. Create a Zero-Based Budget
Time to set up: 10 minutes
Maintenance: 5 minutes
My bills are fairly consistent from month to month. Setting up a zero-based budget doesn’t take very long, and once it is complete, you are good to go. If you don’t know what your expenses should be for your budget, take a look at Personal Capital account. It will highlight your monthly spending trends.
However, if you are married, you need to talk through this zero-based budget with your spouse. I can’t stress this enough. You both need to be in agreement about how you are spending your family’s money.
3. If You Have Debt, Set up a Plan to Crush It.
Time to set up: 10 minutes
Maintenance: 5 minutes
If you’re like most people, you may have a little bit of debt. Whether it’s student loans, credit cards, or maybe an auto loan, trying to decide which debt to focus on first can be overwhelming.
Here’s a helpful tip: Start with the smallest balance first.
Studies have shown that paying off the lowest balance first (the debt snowball) is the best way to pay off your debt. This is due to the quick-win nature of paying off those bills and the momentum from eradicating the smaller debts first.
4. Automate Your Retirement
Time to set up: 5 minutes
Maintenance: 2 minutes
If the company that you work for offers a 401(k) match, I usually encourage everyone to, at least, receive the match. It’s free money, and more importantly, it can propel you towards retirement.
Plus, the money you put towards your 401(k) is automatically taken out of your paycheck each pay period. There is no additional effort required on your end, and your retirement balance can grow through dollar-cost averaging.
Once you contribute up to the match (or hopefully even more), I encourage people, if eligible, to open up a Roth IRA account in order to diversify tax risk for the future. This way, if tax rates go up in the future, you’re covered with your Roth IRA. If for some reason tax rates drop in the future, your 401(k) will protect you.
5. Automate Your Short-Term Savings
Time to set up: 5 minutes
Maintenance: 1 minute
I am a huge proponent of creating an emergency fund with 3-6 months worth of expenses (not income) into a bank account. Once you have saved up for your emergency fund, then you should start saving up for your short-term savings goals.
These goals might include saving for a car, a downpayment for a house, or even a vacation. Automating your savings can allow you to reach your short-term savings goals quickly and with minimal effort.
6. Prune Your Finances
Maintenance: 5 minutes
Like routine car maintenance, you need to conduct financial maintenance to ensure that everything is still in line with your goals. You may realize you are paying for things that you are not utilizing, like a gym membership. What a waste! Take steps to actively reduce unnecessary costs in your budget.
On top of that, look for ways to negotiate your bills. Has your cable subscription or internet bill gone up in price? Call your providers to see if you can lower those type of bills. Many times, they are amenable, especially if you have been using their services for a while. If you don’t care to negotiate your bills, you can seek out companies like BillShark that will negotiate on your behalf and take 33% of the savings in return. They claim to have a 85% success rate.
I currently use Mint instead of Personal Capital. Are there advantages that Personal Capital has over Mint?
Mr. Freaky Frugal recently posted…The 9 keys to Financial Happiness via the Blue Zones
I personally prefer the user interface on Personal Capital compared to Mint. On top of that Personal Capital’s investment section crushes Mint’s. The break down of the fees along with the Monte Carlo simulations make it a great experience for investment nerds like me 🙂
We do automate our retirement savings and all the bill payment except for the CC balance since the bank won’t let us pay automatically.
I heard some people have 10-20 bank accounts for different categories. We keep our finances pretty simple and easy to track.
Ms. Frugal Asian Finance recently posted…What A Luxurious Lifestyle Looks Like To Us
I’m like you. The simpler to the better. I don’t want to worry about too many accounts and tracking too many things 🙂
I depend on a spreadsheet to track our zero based budget and it is exhausting. I am nervous about platforms like personal capital because all our information would be out there. I can’t wait to dive into your review and learn more about it. Thanks for the great tips!
Personal Capital is wonderful. I may be too reliant on the company’s background attached to Paypal. But I feel like they know how to do security. I could be wrong but they have some explanation videos on how it works and won’t get compromised 🙂
Good list. There are great apps now like Mint and Personal Capital that makes budgeting so much easier.
I wish they existed when I was growing up.
CJ recently posted…5 Simple Ways to Succeed In the Workplace
Hahha…I wish Personal Capital was around years ago. I know my finances would have looked a lot differently 🙂
Making everything automatic, I believe, is the key “life hack” for most folks. Once you get money going to retirement accounts, savings, etc. automatically, you suddenly find money in those accounts, working for you, without you doing anything at all.
You start building momentum, then you start looking for other ways to cut back to put more in. The cycle continues until you hit FI. Its a great feeling as you see the progress
Mr. 39 Months recently posted…Tax Time and Stoic Philosophy
Making everything automatic is one of life’s best kept secrets. The more you can make your money frictionless and not have to worry about things, the easier it is to do well 🙂
All about simplicity ; hence the name 🙂
And with technology now more than ever it’s super easy, you just set it and forget it. Well not totally forget it. I do check my accounts on PC rather often.
SMM recently posted…Money Personality: What’s The Downside Of Yours?
Hahah…I seem to check my Personal Capital account twice a day on the weekends even though I know it’s not going to change. There are so many tools that make it fun to play around with 🙂
My wife and I have been consolidating our outgoing payments recently. We used to have separate accounts for different bills, but now that we’re consolidating all that it becomes easy to see just how much our expenses are each month.
Troy Bombardia @ Bull Market recently posted…Simple trading strategy that generates 17.2% per year
Thanks for sharing Troy!!! I can imagine that having separate accounts caused some additional complexity. I know for my wife and I that it’s much easier consolidating and paying our bills together 🙂
I am a huge fan of free money and never had any issues getting them from my employer. I think that this is a great way to make more money while you save. Win win.
I also find it more beneficial if you bundle your finances at one institution, they are more willing to offer you freebies like no fees on certain banking products or no fees on credit cards.
At the end of the day, it all comes down to habits. If you have good money habits, chances are good that your money will grow as time goes by.
Leo T. Ly @ isaved5k.com recently posted…How To Reduce Investment Risks With A Ladder Bond Strategy
That’s a great point Leo!!! If your bank is willing to incentivize you to keep everything in one place, why not take them up on their offer 🙂
Personal Capital is such a game changer… the amount of hours I have saved since my Excel days is staggering. Although, as has been mentioned here, its a little addicting to check all the time!
Hahaha…yes it’s wonderful and definitely a sticky tool 🙂
Negotiating your bills is something anyone can do and should be monitored every 6-12 months. Companies like Comcast want to charge you as much as possible, and they don’t know how much that is, so they continually raise rates till you complain. Then the cycle repeats. If you think you’re overpaying, be sure to take action. If you don’t like to haggle, you can have a service do it for you, or another family member, friend, or neighbor can call. Normally, procrastination is the enemy here.
I totally agree with you Tom!!! It’s so important to pay attention to your bills and not allow companies to let it creep up. Otherwise you’ll be paying out of your nose 🙁
I also made the switch to Personal Capital and find it has saved me hours of tracking. It is so easy to check into one site and see whats going on. I like the use of “prune” on #5, many times people go all out and “cut” way back and realize maybe they should. Take some time, evaluate and make sound choices.
FIbythecommonguy recently posted…Dividend Income Update – March 2018
I totally agree with you!!! See where you can pair back but don’t completely eliminate unless you have to. Otherwise it can really hurt more than you thought 🙂
Love the tips, but I’d respectfully disagree on the amount of time it takes to set up a plan to crush debt. For many it can take more than 10 minutes just to track down lenders after debt changes hands (this is especially common with student loans). That being said it is an essential step to manage finances.
I’m hoping that if you have the Personal Capital account that once you read off your debt that it shouldn’t take too long to pull off the info and set it up in a debt snowball situation 🙂