By Sara Gilbert, GreenPath manager for Colorado and Wyoming
A recent Chase Blueprint and Aite Group study of more than 1,200 consumers found that the complexity of one’s personal finances is directly related to their perception of personal financial health. The more complicated your bill-paying routines are, the more likely you are to see your financial health as declining.
According to the study, “Financial complexity and financial health are closely intertwined. Of those surveyed, whose financial health has declined since the recession, 31 percent said their financial life is very complex, citing a variety of financial penalties and multiple loans.”
Simplifying your finances might be the key to relieving some financial pressure. Using a budget and setting a goal to pay off debt and reduce the number of payments you make will certainly help.
A monthly spending plan, or budget, will allow you to pay bills on time and avoid late charges and related problems with your credit rating. A good plan will help you look forward to the next several paychecks. Estimate your income and expenses on paper for the next month and you have the beginnings of a budget.
Knowing what you spend is an important step to help plug spending leaks and direct where your income needs to go. Track your daily spending for items such as gas, groceries or dining. Your goal here is to simplify your plan using realistic expectations of what you need to spend each pay period. Tracking helps you avoid guessing and stress.
Another way to simplify might be to set up automatic bill payments through your bank account. Be sure to balance your checkbook each month and regularly monitor your transactions to keep enough money in your account to cover payments.
Work to reduce the number of debt payments you make each month. If you have several payments to several credit cards, or you worry about not being able to make payments on time each month, you might check out consolidating debts into one payment with a loan from your bank.
Or use a method to pay off the smallest debt first and then focus on paying off the next debt on your list. Another option might be to check out the Debt Management Program offered by GreenPath. Such a program allows you to make one payment to the program, which then disburses money to each monthly debt payment so they’re paid in full within five years or less.
Avoid payday loans or other short-term loan products that seem easy to get but hard to pay off.
Take a look at your finances and start down the path to financial wellness today!