Your 30 Day Financial Challenge
Dear Rich Lifer,
A recent study by the U.S. Bank found that only 41% of Americans use a budget even though it’s one of the most effective ways to keep track of your finances.
Building a budget, automating bills, consolidating debt, negotiating lower premiums…all these financial must-dos are easy on paper but for whatever reason prove challenging in practice.
Why do you avoid doing what you know is best for your money?
I roll my eyes whenever I hear that old proverb, “A journey of a thousand miles begins with one single step.” But I have to admit, it’s true. If you’re feeling stuck financially, like you don’t know where to start even though you know what you should be doing, let me help.
Set aside five to 30 minutes each day over the next 30 days and follow my financial checklist. Don’t worry about trying to be perfect, this is an exercise in action. Here’s the full 30-day challenge to kick off your 2020:
Day 1: Make A List Of All Your Income and Expenses.
Use an app like Mint or software like Excel to help you. Your goal is to have a clear picture of where your money goes each month.
Bucket your income and expenses into different categories like Savings (retirement, emergency fund), Mortgage/Rent, Household Expenses (food, utilities, heating oil, etc.), Auto (car payments, tolls, Uber), Debt Repayment (student loans), Entertainment. It doesn’t have to be perfect, you just need to capture everything.
Day 2: Continue Day 1.
You might need a second day to get all your income and expenses tracked. If you can go back as far as one year, that’s even better. You’ll see irregular expenses like property taxes and gifts you might not have budgeted for looking at only the last 3 months.
Day 3: Build a Spending Plan.
Based on the data you collected in days 1 and 2, build a plan for your money.
Are you happy with how your money is being spent currently? Are there areas where you’d like to spend less money? Choose one area in your budget you want to reduce spending.
Day 4: How are You Going to Save in That One Area?
If you decide you’re spending too much on eating out, think of ways you can save in this one area next month. You can try meal prepping an entire week’s worth of lunches on Sunday or use the envelope method for meals out.
Day 5: Reduce Your Fixed Expenses.
Rather than trying to save in areas that require willpower like skipping Starbucks, look at your fixed, recurring expenses and figure out where you can save without having to lower your quality of life.
For example, if your cell phone bill costs you $80 per month now, how much could you save by calling your provider and negotiating a lower bill? A 20-minute phone call might save you an extra $15/month or $180 per year.
Areas to look for recurring savings:
- Utilities – energy saving light bulbs, programmable thermostat, wash laundry in cold water, etc.
- Transportation – carpool, take public transit, walk more, sell one of your cars.
- Cell Phones – family plans or corporate discounts, bundle internet, cable and your cell phone.
- Cable – cut the cord, replace expensive cable packages with cheaper streaming services.
- Internet – do a speed check to make sure you’re getting what you pay for. If you’re not, contact your provider and ask for compensation.
- Insurance – review your deductibles and yearly mileage. Some carriers base your premiums on how much you drive. If you’ve changed jobs or commuting patterns, you might be overpaying.
- Refinance debt – refinancing your mortgage or consolidating student loans can lower your monthly costs.
Day 6: Manage Credit Card Debt.
If you have credit card debt, call and see if you can negotiate a lower APR. A lot of providers offer 0% APR promotions. If you qualify, make a plan to pay down your debt before the promo period ends.
Day 7: Call Your Cable and Internet Providers.
Don’t pay for what you don’t use. Negotiate a smaller cable package or consider cutting the cord and switching to cheaper streaming services.
Day 8: Pull Your Credit Report.
Go to Annualcreditreport.com to get your free credit report from each of the three credit reporting agencies (Experian, Transunion and Equifax).
If you find any discrepancies, report them immediately. Mistakes on your credit will cost you money by making lending more expensive.
Day 9: Shop for Better Car Insurance.
Take a safe driver course online. For a few hours of your time and $25, you can save a decent amount on your insurance.
Day 10: Automate Your Finances.
Look at your budget and figure out which recurring bills you can automate. Also look at your savings and determine whether you’re on track to fund your retirement, emergency fund, or next vacation. Set up auto transfers to make saving and paying bills easier.
Day 11: Declutter.
Pick a room or spend the weekend decluttering your whole house. Gather things to donate, trash, or sell.
Day 12: Continue Day 11.
Continue decluttering and find a few more things you can get rid of, donate, or sell.
Day 13: Post Items for Sale
Post the items you’d like to sell on Craigslist or Facebook Marketplace. As soon as you sell them, take three-quarters of the proceeds and place it in savings. Use the rest as discretionary income.
Day 14: Declutter Your Finances.
Do you still get paper bills? Can you sign up for e-bills? Schedule a time every month to get the .pdf files and save them if you want to keep the bills. Shred documents that are no longer needed.
Day 15: Organize Your Financial File.
Make a few folders (virtual or physical). One for tax receipts, one for documents you have to keep for future reference (like a cancelled check for a security deposit until you get the deposit back), and one for monthly rotating documents (receipts that you can get rid of after reconciling with the credit card statements, bills that you can get rid of after paying them off, etc.)
Day 16: Have a Financial Date with Your Partner.
Talk to your partner about your finances to make sure you’re both on the same page. Align your goals and spending plan with your partners so there’s no surprises.
Day 17: Build a Master Financial Document.
After your financial date, you should create a master financial document with your current net worth, monthly budget, and all your accounts with passwords.
Make sure you encrypt this document and keep a copy in a safe place. Start it today and keep working on it until it’s complete.
Day 18: Spend One More Day Working on Your Master File.
Self explanatory, but you shouldn’t make a master file in a hurry. Be thorough and take an extra day to complete it.
Day 19: Take Inventory of Your House.
To ensure your homeowner/renter insurance is accurate, you need to know what you own and how much it will cost to replace. Spend the day taking an inventory of all your most prized possessions.
Day 20: Do a Bank Audit.
Are you paying for a checking account or credit card? If you are, it’s time to change banks. Shop around for a free checking account and no-fee credit card.
Day 21: Do an Interest Rate Audit.
Are you getting the best interest rate? You don’t need to go chasing the absolute lowest rate but do a quick audit once a year to make sure you’re not getting ripped off.
Day 22: Do an Investment Audit.
How much are you paying in expense ratio? Are there ways you can reduce this and improve your return?
Day 23: Do an Energy Audit.
Do you have energy vampires? Check with your utilities company to see if they will do a free audit or buy a “Kill-a-Watt” device and DIY.
Day 24: Kill Some of the Energy Vampires.
After you finish your energy audit, fix some of the problems yourself. Whatever else you can’t fix arrange for a professional to come and resolve the issues.
Day 25: Do a Subscription Audit.
Netflix, Hulu, Spotify, Apple Music…the list goes on. If you have a number of entertainment or online magazine subscriptions, consider cutting the ones you use less frequently.
Day 26: Find More Ways to Save.
Look at your company’s HR page, your credit card company’s benefits page, your insurance company’s discount page and any other subscription’s (like AAA) pages to see what discounts you are eligible to receive.
VISA, Master card, American Express and Discover all offer benefits to card holders that can save you money with discounted tickets, extended warranties, etc.
Day 27: Calculate Your Hourly Wage.
If you’re on salary, you might not think about how much you get paid per hour. Do the math and you’ll know how many hours each of your purchases are costing you. This is an empowering exercise.
Day 28: Buy a Friend Lunch.
Take someone you admire and want to learn from, out to lunch. Ask questions and listen. This is one of the best ways to invest in your career.
Day 29: Update Your Information.
Make sure your beneficiary information for all your accounts is updated.
Day 30: Update Your Will.
You only need to do this if there’s been changes to your assets or life situation since the last time your will was updated.
That’s it! If you make it through all 30 days, you’ll have accomplished more in one month with your money than you will all year.
To a richer life,