In college journalism classes, students learn the cardinal rule of good writing: “KISS.” It stands for “Keep it Simple, Stupid,” and it’s an axiom that can apply to many other aspects of life. Simplicity has merits for your financial life, too.
Managing money is inherently complicated – from making and following a monthly household budget to figuring out how much of your income to set aside each month for retirement and college savings. Getting back to financial basics, and simplifying your finances, can streamline your money management efforts and make you feel in control.
You’ve probably heard a lot about the value of “unplugging” from time to time, and turning off the TV, your smartphone and your laptop. Well, your financial life can work the same way. “Unplugging” some spending habits can help you reconnect with some basic principles of saving and managing money.
Here are a few ways to unplug your spending:
Start using cash.
Even though we’ve all been using it for decades, plastic still makes it easy to overlook how much you’re really spending. Paper bills leaving your hands remind you that you’re spending money. So, pay cash whenever possible, especially for small purchases like your morning cup of coffee. Spending real cash will help you think more actively about living within your means.
Close the door on cell phone costs.
Many of us have our cell phone bills on auto pay – which is a good thing in that it ensures you’ll never pay the bill late or miss it altogether. But cell phone plans that allow you to go over your minutes – and then charge like the dickens when you do – make it easy to zone out on the real cost of your cell phone. If you find it difficult to control these overages, switch to a prepaid phone. When the minutes you’ve paid for run out, you’ll have to really think about how much more you’re spending on phone service when it comes time to replenish those minutes.
Push the envelope on your household budget.
What’s one of the easiest, lowest-tech ways to stick to your household budget? Make envelopes. At the beginning of every month, when you’ve established your budget, split the “accounts” into separate envelopes – one for gas, groceries, clothing, etc. When you spend money for that account, mark it on the outside of the envelope and keep a running balance. As money goes out of the envelope, you’ll get a better perspective on how much you really spend each month. Put whatever money is left over in those envelopes at the end of the month to supplement your savings, and put those funds back into the account you’ll pay first next month – your savings account.