30-Day Money Cleanse - Week 2: Devise a Plan and Take Advantage | Personal Capital
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30-Day Money Cleanse – Week 2: Devise a Plan and Take Advantage

In Week 1 of the 30-Day Money Cleanse, you learned all about how to be more aware of your cash flow. Now in Week 2 it’s time to set some goals for your money and create habits so you can effortlessly focus on working toward them.

Are you trying to eliminate debt? How about putting a down payment on a home? Saving for your kid’s college education?

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During this next week’s challenge, we invite you to take 1 simple step each day to prioritize your spending habits. That means setting goals for your finances and taking advantage of the many high-quality yet simple technology solutions out there.

First we talked about financial awareness. Next we’ll take the goals you set up this week to show how to rev-up your plan by putting and put it into action in Week 3. Finally, during Week 4 we will teach you a few ways to future-proof your money and maintain the good habits you learned during the 30-Day Money Cleanse. In no time you’ll know your finances like the back of your hand, create habits that are critical to sustained wealth creation, and make your money work for you.

Day 8 – See How you Stack Up

Evaluate if you are saving more than you’re spending. You should have 50% of spending going to basic needs items, 30% to discretionary spending and 20% to savings.

Day 9 – Devise a Plan

Create your plan. It should focus on: 1) Paying off high interest debt first, 2) Setting up an emergency fund, 3) Save 20% of every paycheck.

Day 10 – Cut Down on Discretionary Spending

If dining out eats up a huge portion of your budget, set a weekly limit and stick to it.

Day 11 – Think About Refinancing

Explore refinancing high interest debt like mortgage or student loans. Anything over 4% should be looked at for a potential refinance. If you have ANY high interest credit card debt, this should be your top priority.

[Related: How Wealth-Minded People Deal With Their Credit]

Day 12 – 401k Check in

If your employer offers it, make sure you are enrolled in the 401k. The max is $18,000 for 2016 for anyone under 50; and $24,000 for anyone 50+.

Day 13 – Set Up an Emergency Savings Account

Multiply your mandatory monthly spending by 3 and by 6 (so, if you spend $2,000/month, your range is $6,000-12,000.) Put this much money into a savings account separate from your everyday checking. This is not meant for fun or vacations – it’s for true emergencies (like a sudden medical expense or job loss).

Day 14 – Discover Your Net Worth

Use an aggregator like Personal Capital to find your net worth. The software can do this for you. It will total up your assets (bank accounts, 401k, brokerage accounts, and home value) and subtract any debts (credit card balances, student loans, car loan, and mortgage).

Day 15 – Rest

You’re half way there. Good job! You deserve a breather.

Check out our entire Money Cleanse Series:

This communication and all data are for informational purposes only and do not constitute a recommendation to buy or sell securities. You should not rely on this information as the primary basis of your investment, financial, or tax planning decisions. You should consult your legal or tax professional regarding your specific situation. Third party data is obtained from sources believed to be reliable. However, PCAC cannot guarantee that data’s currency, accuracy, timeliness, completeness or fitness for any particular purpose. Certain sections of this commentary may contain forward-looking statements that are based on our reasonable expectations, estimate, projections and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. Keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Michelle Brownstein is the Vice President of the Private Client Group at Personal Capital. She is a Certified Financial Planner with a wide range of experience in investment management.
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Let us know…

This year, my top financial priority is:

Building my emergency fund
Paying off high-interest debt
Budgeting better
Saving for a short-term goal, like a vacation or new car
Increasing my investment contributions
Maintaining status quo - I’ve got this under control

Make moves toward your money goals with Personal Capital’s free financial tools.