Managing Household Finances: A Simpler Approach
When it comes to handling your household finances, there’s often this pressure to maximize credit card rewards, minimize taxes, and secure the best returns on investments while also gathering the highest interest on savings. It can feel a bit overwhelming, right? Christine Benz, who oversees personal finance at Morningstar, urges a more honest approach to dealing with that pressure.
She mentioned to CNBC Make It, “There’s this optimization mentality in the finance industry. If you’re just getting started, it’s easy to think that you must do it this way and that any shortcuts are wrong.”
If you enjoy diving deep into the nitty-gritty of finance, that’s great. But Benz believes that for many of us, adopting a simpler strategy can save time and mental energy, allowing us to focus on other priorities while still working toward our financial goals. In a recent article, she referred to this as a “good enough” approach. While you might not be maximizing every aspect, there are four strategies that could help achieve decent results with much less effort.
Reverse Budgeting
Benz emphasizes the importance of saving a portion of your income as a foundation for major financial goals, like saving for retirement. “If you’re fairly frugal, you might not need to do much more,” she says. Even if your investment decisions aren’t top-notch, maintaining a decent savings rate can cover a lot of potential weaknesses in your financial plan.
Essentially, regularly investing 20% of your income, even in a mediocre portfolio, is likely to yield better outcomes than investing a mere 5% in a stellar one. For simplicity, Benz suggests trying a technique she calls reverse budgeting. Instead of adjusting your spending to maximize your savings, set aside a fixed percentage of your income—she recommends around 15%—to be automatically directed toward your financial goals. Then, you can spend the rest however you wish.
Index Investment
In theory, picking the right investments at the right times could lead to beating the stock market, but in practice, it’s notoriously tricky. For example, only 8% of large U.S. stock mutual funds managed to outperform the S&P 500 over a decade ending in June 2025, according to Morningstar.
This is where Benz advocates for a core portfolio made up of index funds. These funds typically feature low fees and reflect the performance of a market index instead of attempting to beat it. “Data suggests index funds are a solid option that you can simply set and forget,” she remarks. “They provide exposure to various sectors of the stock and bond markets.” In Benz’s view, index funds offer a nice balance between optimization and a “good enough” approach to investing.
Simplify Financial Relationships
No one wants to stash their money in an account that offers little to no interest, but Benz points out that chasing the best cash product can become counterproductive. “It drives me nuts to see people running around for a few extra percentage points,” she says. She advises opting for a low-cost provider that consistently offers competitive yields.
When it comes to securities trading, she mentions it’s worthwhile to explore the benefits of a “sweep account,” where uninvested funds rest in a brokerage account. If you’re looking into high-yield savings accounts, it’s wise to stick with a familiar bank, as interest rates can fluctuate. This might save you from the hassle of constantly moving your money around to chase the highest rates.
Moreover, if your bank or brokerage has a credit card with favorable perks, that can simplify things even more. Benz states that consolidating financial relationships can make life easier. “Reducing the number of entities involved is beneficial,” she adds, noting that while you don’t want to be entirely lazy, making fewer connections can ease management.
Utilize an Advisor
Benz lives and breathes finance, having written a book on retirement. Yet, she and her husband still opt for professional help in navigating their finances and planning for retirement. “Working with a financial planner allows us to have an optimized financial strategy without getting bogged down in all the details,” she shares.
It’s not that she or anyone else couldn’t handle it alone, but by delegating some tasks, it frees up time and energy to focus on what truly matters to them. Benz prefers fee-only planners who charge by the hour or for specific services rather than being paid to sell certain financial products, which can sometimes lead to conflicts of interest.
In her experience, engaging with professionals has proven worthwhile. “At first, I thought, ‘I should handle this myself,’” she reflects, “but it became clear that working with those who have the right tools to yield excellent results was a smart choice.”
