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Set Your Finances On 'Easy'

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By Jean Chatzky

Published: January 27, 2008

Some people enjoy the details in managing money: Shopping for the best interest rates. Balancing checkbooks to the penny.

I am not one of them. If you are, this column isn't for you.

This is for people who want all those money-management tasks to be a little simpler and a less time-consuming.

A book by Liz Pulliam Weston, "Easy Money: How To Simplify Your Finances and Get What You Want Out of Life" can help point you in the right direction. We had a conversation, and she gave me a heads up on her best stuff:

Automate. Put everything you can on autopilot so it's out of your mind. These days, you no longer have to take your paycheck to the bank because most companies offer direct deposit.

That means you wake up the morning of payday, and it's already in your account. You can do the same thing for Social Security checks and tax returns. But you can also automate the savings process, which means the money will stay out of your hands and, as a result, you'll probably save more. Set up your 401(k) at work, your IRA or your emergency fund to automatically withdrawal a set amount from your checking account or paycheck once a month, and the bank will do the rest.

Bank online. I'm a fan of these tools, which are offered by most banks (some may charge a fee, so ask before you sign up). Processes that used to keep you chained to your desk - paying bills, balancing checkbooks, reviewing statements - can be completed in minutes. Other perks? No more spending money on postage, and less clutter because most banks send your statement via e-mail.

Make saving for retirement easy. Investing really doesn't have to be complicated, and employers and brokerage firms have more tools than ever to ease the pain.

"One of the things they're offering is lifecycle or target-date maturity funds. These aren't the solution for everyone, but they are a no-brainer solution if you're panicked and paralyzed and don't know what to do," Weston says.

What these funds do is diversify your money automatically so a portion goes into stocks, bonds and cash. Then they rebalance for you as you near retirement age so you're investing more aggressively when you're younger and then gradually start to become more conservative as time goes on. They're not aggressive enough for some investors, but if you don't feel comfortable picking stocks, these funds are a good option.

Simplify health insurance. "I like to remind people that insurance is supposed to be for catastrophic expenses. If your family is basically healthy or you are basically healthy, take a look at catastrophic policies," Weston advises.

These policies have very low monthly premiums but high deductibles. That means you'll pay out of pocket for doctor's visits and prescription drugs until you reach the deductible, which can be thousands of dollars. The plus is that even with a couple of visits to the doctor and pharmacy each year, you'll probably still spend less than you would paying out monthly premiums. The minus? If you fall really ill, you could end up shelling out a lot of money before coverage kicks in.

Get a will. You can call a local lawyer and tell him or her that you need a will, a living will, a health care proxy and a durable power of attorney. It's a simple process that will run you between $500 and $1,000. If you don't have the cash, online solutions such as LegalZoom.com can help create documents that will stand up in court.

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