How Much Time Should You Spend on Your Finances?
Years ago, people would buy a copy of personal finance management software to help manage their money. They’d budget how much they wanted to spend in certain categories, and enter how much money they spent at the end of every week or month. It was tedious, time consuming, and downright boring.
Today, it doesn’t have to be like that. For me, I make sure I automatically save more than 10% of my gross income annually for retirement and I don’t spend more than I make. As long as that’s the case, I’m usually fine with where the rest of my money goes. However, I will take a look at my spending occasionally to see where I can make some cuts.
There’s no hard and set rule of the amount of time you should spend, but you should be reviewing your finances on a regular basis. Here are a few tips you can use:
Review your spending/financial statements
It’s best to look over how much you spend every month or two, particularly if you find yourself spending more than you make or a little more than expected in certain categories. Expect to spend a few minutes on this. If you want to be thorough, it may take much longer.
You should also be regularly looking at your credit card statements or online banking balances to make sure there aren’t any charges or withdrawals you don’t recognize. This shouldn’t take more than a few minutes. If something looks fishy, notify your financial institution immediately. If you’re a victim of credit card fraud, contact the card issuer, write down who you spoke to, and let both Equifax and TransUnion know you want to have a fraud alert added on your file.
Check your credit score/report
It’s good to monitor your credit score to make sure your finances are in good shape. You can get your free credit score on Ratehub.ca or a number of other sites. You should also check your credit report at least once a year to ensure everything’s fine. You can pay for this service or if you’re frugal like me, you can get it for free. With Equifax, you can get a copy by mail, phone, fax, or in person. It’s the same with TransUnion except you can now get your credit report for free online. It will only take a few minutes to review if your report is short.
Pay bills automatically
Paying your bills shouldn’t take you very long. The easiest way to speed up this process is to add every bill possible to your credit card in order to save time and earn rewards. Some of the best cash-back credit cards allow you to earn a higher cash-back rate for recurring bill payments. For the bills that can’t be added to your credit card, set up an automatic bill payment. Your credit card and utility bills are likely one of the few that can’t be paid automatically since it will often vary month to month. It should take you less than a minute to pay each of these bills every month.
Save and invest
Like your bill payments, you can also make your savings automatic. When you have a large savings goal, you can set aside a certain amount of money every month and have it automatically deposited into a high-interest savings account. If you’re investing, you can take a hands-off approach and let a robo-advisor determine your asset allocation. All you have to do is sign up and everything is done for you.
If you want to have more control over how you invest, you can do it yourself. The hands-on approach will take a lot more time, especially if you decide to build a portfolio of individual stocks instead of exchange-traded funds. You may want to review your portfolio every quarter, and it might end up taking hours of your time conducting research and looking for the right stocks based on your investment strategy.
The bottom line
By following these tips, I’ve managed to take control of my finances and now have more time to enjoy life. Simplifying your finances and having fewer things to do will allow you to spend time on things you really want to do.
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