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

in Financial Planning, Investing by

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?

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.

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Michelle Brownstein, CFP

Michelle Brownstein, CFP

Michelle Brownstein is the Senior Vice President of the Private Client Group at Personal Capital. She is a Certified Financial Planner with a wide range of Investment Management experience.

4 comments

  1. Joseph

    I think you may have a typo on day 11. Anything under 4% is a pretty good rate in my opinion.

    Reply
    • Tamar Kuyumjian

      Tamar Kuyumjian

      It should be over 4%, our apologies and good catch, thanks!

      Reply
  2. mary ann hurrle

    Do I just follow the steps on 30 day money cleanse exercise or is there a link I need to click on to get started?

    Reply
    • Tamar Kuyumjian

      Tamar Kuyumjian

      In order to do the 30 Day Money Cleanse you’ll need to download our free Personal Capital app, then simply follow the steps for each day. Thanks for the question!

      Reply

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Disclaimer. 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.