How do you live comfortably if you don’t have finances? Sure, money isn’t everything and you don’t need money to be happy, but living month by month not knowing if you can afford to keep your car, phone, job, electricity, or even your house is not an ideal way to spend the rest of your years. This can be assumed to be a unanimous consensus, correct?
Then why did the National Foundation for Credit Counseling last year report that less than half of Americans keep close track of their spending and almost 30% are not even saving for retirement?
It’s not all doom and gloom though. It is easy to improve your savings. You can even improve them exponentially. And it only takes two weeks to do it. Here is Business Insider’s 14-Day plan to help you gain better control of your finances:
Monday, Day 1
Find Out Your 90 Day Number
“Shark Tank” investor Kevin O’Leary states in his book “Cold Hard Truth on Men, Women, & Money,” that the critical first step to make before any big shifts in financial control, is getting your 90-day number. It is the sum of every dollar you have received and spent in the last three months. There is no gray area when it comes to money. Your number will either be positive or negative.
To get the number, you calculate:
Income number – expenses number = 90-day number
If it’s positive, congratulations! You’re off to a good start. If it’s negative, you are making a good decision to do this 14-day plan. If it’s around zero, you also have some work to do.
Tuesday, Day 2
Set Up a System to Track Spending
This is an easier day. All you have to do today is chose a system that keeps track of your income and expenses for the future. After you implement this, anytime you would like to view your 90-day number, it will take less than five minutes to figure it out. Knowing your 90-day number more quickly is a quick trick to help finances in the future, because if you find out your number at the end of every month and your number is gradually rising, you have definitive proof that you are doing better with your finances.
Two Popular Tracking Options:
Mint- An app that connects to your credit cards and bank accounts, and automatically pulls from the connected accounts to log every expense and paycheck received. Three clicks in the app and your spending habits are put into a fuller perspective.
Microsoft Excel Spreadsheet- If you are comfortable with Excel already, you may enjoy doing all of the logging yourself manually. Just be cautious of human error!
Wednesday, Day 3
Add Up All Your Debt
There are different kinds of debt, and yet they all have the same end goal. To pay back what you owe to another person or company. Today is dividing your debt into two different categories: Good Debt & Bad Debt:
Good Debt- Lower interest rates and is paying off for something valuable like mortgages and student loan debt. This is less urgent to be paid than bad debt.
Bad Debt- Higher interest rates and pays for a depreciating assets like credit card debt or a car loan.
It is a tremendous struggle for people to face the number they owe in debt, so the last thing to do today is add up all the debts you owe and take a gander at that number. You will come back to it tomorrow.
Thursday, Day 4
Create a Budget
When you budget you know exactly where the money goes and that it goes exactly where you want it. You can go back to the Mint app to do this. You could also use You need a Budget. Make a line for every category of spending and income you receive. The more specific you are, the more control of your finances you will have. Assign every category the amount you will spend that month along with creating categories for how much you can set aside for debts.
Friday, Day 5
List What You Want to Save for and Create the Number You Need to Reach
If you have long term goals, like buying a house or going on an expensive vacation, you will have a better ability to prioritize what you want and where to handle your finances. This can help you build an emergency fund for any unexpected costs.
Business Insider writes:
“Now, time to work backwards. Let’s say you want to save $50,000 for a 20% down payment on a home, plus broker and other fees, in eight years. If you’re saving in a regular savings account with insignificant interest, $50,000 divided by eight years is $6,250 a year — $521 a month, $130 a week.”
Saturday, Day 6
Start Saving Up With Your Extra Cash
Save money? Gross. It’s my money, I want to spend it NOW. That is how not to think of saving money. The best way to think of it is that saving money is just the best way to spend money on what you really want. Things that you cannot easily have when you do not save. A good way to start saving is freeing up some cash and start putting it away. How do we do this, you ask? There are so many necessities we spend on, how can we free up cash? Here are two ways:
Negotiate- Bills and memberships are only a phone call away to being a lesser price a month. It may not work, but it is worth giving it a shot.
Reduce-Take a look at the groceries that you don’t need, the restaurants that are a little costly, or the stores you buy clothing at. See if there is a way that you can alter changes in these categories that will have you spending less, but doesn’t throw your life into chaos.
Sunday, Day 7
Start Saving Automatically
Key to saving? Paying yourself first. Call your bank or credit union and have a portion (or a larger portion) of your paycheck going right into your savings account before you can even touch it. You won’t even miss it or notice it’s gone.
Monday Day 8
Assess Income. Find One Place for Improvement
Today is taking one step towards building a better income. Options are:
- Asking for a raise at your job
- Look for a higher paying job
- Taking on freelance projects
Tuesday, Day 9
Call for Your Credit Score
Easy task today. A credit score is a 3 digit number between 301 and 850. You want it to be as high as possible. A score below 650 is a score you do NOT want to have. You have a right to a free credit report by calling 877-322-8228 or by visiting annualcreditreport.com. It’s the only place to offer you one free credit report every year.
Wednesday, Day 10
Change to a Credit Union
Banks make over $1 million a year in fees. If you are at a bank that is charging you things like holding a checking account or withdrawing cash from the ATM, it may be time to switch out. When selecting a credit union it is important to read the disclosures before signing up. Always know what you are getting into!
Thursday, Day 11
Keep Financial Documents and Passwords Top Secret
Today is making sure your financial documents are in a secure, password protected place in your office, home, or computer. Also making sure your passwords are hard to guess, and differ from site to site.
Friday, Day 12
Double Check You Are Insured
Here are the insurances you should have by the time you reach a certain age:
When you’re in your 20s:
When you’re in your 30s:
When you’re in your 40s:
Saturday, Day 13
Plan out a Calendar for Financial Future
You have done so much these last two weeks, and you don’t want any of it to go to waste. This is why for the last day, you will set up your financial calendar, reminding you of all financial events so you will remain in control. Google Calendar is an easy setup and tool to use for this.
Important info to add to your calendar:
Once a Month
- Evaluate Budget
- Check Credit Score
Once Every Four Months
Once Every Six Months
- Check Balance on Retirement Account
- Adjust Savings Goals
Once a Year
- Evaluate Investment goals
For more information on the 14-Day plan to drastically improve your finances, you can read the full article on Business Insider.