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Automate your finances, simplify your life

 

I don’t know about you, but I haven’t come across many people who enjoy doing paperwork. It’s at the bottom of the list of my favourite things to do, and I’m a big fan of finding easy ways to organise my affairs so there is minimal administration.

One of the effects of aging is that it affects the brain’s capacity to remember, plan, organise and make decisions, so avoiding complexity and clutter is important, particularly in the latter stage of life.

There are two key principles of good financial management which allow us to declutter our finances and free up more time to enjoy life. These principles are simplicity and automation.

 

Review all your financial arrangements

Investments should be regularly reviewed. If you have small holdings (of shares or managed funds) that you have owned for a long time, consider whether you should continue to own them. Many listed companies now buy back small holdings to save on administration costs.

Over time it is easy to accumulate numerous different life insurance or endowment policies which may no longer suit your requirements. Review these with your insurance broker.

If you have a large investment portfolio, consider having it managed for you by an investment adviser. Some people take great pleasure in managing their own portfolios; however, there comes a time when the effects of aging make portfolio administration challenging.

 

Implement regular withdrawals

Most people rely on payments from their investments to top up their pension income. It’s a good idea to have part of your portfolio dedicated to this purpose, and to make regular fortnightly withdrawals. The certainty of income this provides makes budgeting much easier. The withdrawals can be a combination of investment return and investment capital.

An adviser can help you work out how much you can safely withdraw from your portfolio so you don’t run out of money over your lifetime. Or you could consider a specialist drawdown product, like Lifetime Income.

 

Automate what you can

Automate your banking by setting up direct debits or automatic payments for your bills. It’s best if you have separate accounts for your automatic payments and your day-to-day transactions. Then simply set up a recurring transfer of a set amount each fortnight into your bills account to cover the outgoing payments.

You can estimate how much you need to transfer by calculating the annual amount you spend on bills, then converting this into a fortnightly figure. Setting it up this way means you should always have enough money to cover your automatic bill payments. Review the amount every few months to make sure you’re on track.

 

Reduce paper mountains

Set up your online banking so you can easily see all your account balances at a glance and have your bank statements sent to you electronically to reduce your paperwork.

Finally, declutter your papers. Contrary to popular belief, most people only need to keep personal financial records for as long as they are useful. Unless you own a business or are a landlord, then you must keep them for seven years.

It’s best to shred unwanted financial records such as bank statements before putting them in the rubbish to protect your personal information. Once you’ve thrown out unnecessary papers, put all your important documents together in a safe place. Record important details such as policy numbers or account numbers in case your documents are lost and make sure this information is held securely. It’s a good idea to tell a family member or close friend where this information can be found.

These simple measures should make life a lot easier and will ensure that if for any reason you are no longer able to look after your affairs, your family or the executors of your estate will not be faced with an insurmountable task.