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These 3 tweaks will simplify your money. Because life is complicated enough

Allison Tom, 50, and Dylin Redling, 49, recommend automating as much as possible
Source: Dylin Redling

Life is hard enough these days.

Don't let handling money add to the burden of the difficult life we're all living.

Whether you have enough money or not, streamlining your finances will lighten everything.

You can cut through the myriad of money tasks two ways: with specific concrete actions and with mindset tweaks.

To reset your money psychology, stop constantly reacting to outside stimulus.

Behavioral economist Richard Thaler says he scrupulously avoiding "reading anything in the newspaper aside from the sports section."

In general, the time you spend trying to make the best decisions does not pay off. Instead of following the news, learning about individual stocks or exhaustively comparing financial decisions, learn the basics and figure out the things you can actually control. 

Then organize and set up systems to fly through your routine financial tasks. 

1. Do less

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The way to trim your to-do list is through the magic of automation. 

Three things really simplified finances for Allison Tom, 50, and Dylin Redling, 49, personal finance bloggers who live in San Francisco.

Tom and Redling automate everything possible.

"Put all your expenses on a credit card that you pay off in full each month," Redling said. 

Bonus credit if your card has a good points program. 

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Automate all your investments, Redling says. Just like your 401(k) at work is on auto-pilot, set your other accounts to deduct money from your bank account so you build up savings and taxable brokerage accounts.

Don't forget your bills. Eric Bowie, 49, a personal finance blogger in Kansas City, Missouri, recommends setting up automatic payment for all recurring expenses: mortgage or rent, utilities, student loan or car payment.

This way, you don't have to repeat an unnecessary task each month. Just be sure your accounts have the funds to cover the amounts.

When everything is set up and running, only look at accounts once a month or even less. "Consider doing any necessary tweaks only once or twice per year," Redling said.

2. Simplify investing

Do you truly need dozens of funds?

Investing doesn't have to be complicated, according to Taylor Larimore, author of several books on investing. Simpler really is better. 

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three-fund portfolio uses basic asset classes via three "total market" index funds: usually bonds, domestic stocks and international stocks.

Larimore, an expert in the investment strategy of John Bogle, founder and late chief executive of Vanguard, emphasizes keeping fees low and not trying to time the market.

Simplicity is the point. You have less to worry about and less to keep track of, says Ryan Mumy, a certified financial planner and founder of Mumy Financial Advisors in Hickory, North Carolina.

Newcomers to investing can especially benefit from a less-is-more approach, Mumy says. "People often over-diversify early on," Mumy said.

For the utmost in simplicity, a target-date fund gives you the right mix of equities and bonds for your desired retirement date, and rebalances automatically. 

The more funds you invest in, the more you'll pay in fees. Over time, fees have the potential to cut into your earnings.

3. Know where everything is 


Consolidate all your account information — type of account and password for each — in one place.

Group the accounts by institution: banks, investment accounts, retirement accounts, life insurance accounts. For each one, write down the name of the bank or company, your account number, user name and password.

That one central place could be a notebook or file folder. Ken Hoyt, a CFP with Perennial Advisors in Westford, Massachusetts, prefers the desktop version of Excel, not the cloud-based Google doc. "There's always a chance you can give up your machine to someone," he said. (Don't name the file "Passwords," Hoyt warns.)

Hoyt estimates that the average person has about 15 accounts, not including shopping sites such as Amazon. The total time to sit down and consolidate all your information for these accounts?

Surprisingly, Hoyt says it's probably a maximum of two hours total. 

"It's really not that long — it's just sitting down and getting started," he added. "Like with most things, that's always the hardest part."

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