5 hacks to simplify your finances and reduce your mental load
Have you planned what to make for dinner? When your bills are due? Or any of the other million life admin tasks you need to do?
Every one of us carries a mental load. It’s the cognitive effort we expend trying to manage our daily lives, from getting to work on time, planning what’s for dinner, making sure bills are paid and a raft of other to-dos, our brains are filled with a cocktail of admin at all times.
But there are some things we can do to lighten our mental load – and simplifying our finances is one of them. Here are five things you can do to take the weight of financial admin off your mind.
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1. Compartmentalise your money
Ok, it’ll add something to your to-do list in the short term, but this can be transformative over the long term. Categorising your money is about assigning different chunks of your income to different categories, from discretionary spending to groceries to entertainment – even takeaway can have its own little pot.
Compartmentalising your money helps you make simpler spending decisions because it helps to clearly lay out what money is available for what purpose. It saves having to mentally calculate whether $500 will cover the kids’ party next weekend, your phone bill and your petrol… and it lightens that mental load in the process.
2. Automate, automate, automate
Automation is one of the best ways to ensure you’re upholding your financial organisation. You can automate your savings (even if it’s just auto-saving your spare change through round ups), auto-pay your bills, auto-fund your investments, and auto-distribute your income into your different financial categories.
Not only does this take a weight off your mind, it removes the temptation to spend money outside of your predetermined budget.
3. Streamline your expenses
One of the biggest mistakes I used to make with my money was I’d have a “good fortnight” and a “bad fortnight”. The good fortnight was when hardly any of my bills or rent fell due, leaving me with a decent amount of discretionary income to blow through. The bad fortnight was when all of my bills and rent were due, and so I’d scramble through the period with very little wiggle room.
Not only is this a mental load nightmare, it wreaks havoc with your relationship with money. An easy antidote to this financial chaos is to total up all your regular expenses for the year – yes, the year – and divide that total by the number of times you’re paid per year. Then, from every single pay, you set aside an equal amount of money towards your regular bills.
For extra simplicity points, add a 10 per cent buffer for unexpected increases or variances. Then sit back and enjoy your simplified finances.
4. Set up a money review routine
A regular money review is a great way to spot money leaks, errors or inconsistencies in your financial behaviour. Set aside some time each month to check in with your savings balances, transactions, bill payments and other aspects of your money management. By giving yourself a defined window of time to think about your financial admin, you lighten the load for the rest of the month.
5. Utilise sinking funds
Sinking funds use the same load-lightening benefit of streamlining your expenses, but apply it to bigger expenses like annual insurances and registrations. Instead of being lumped with one huge bill every 12 months, save your way to the total throughout the year.
Next time you’re hit with a large annual bill, take that number, divide it by 12, and set aside a contribution towards next year’s payment each month. Trust me, it’s a game changer for your money mental health.
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