Keeping tabs on your finances can be much easier said than done. With thousands of personal finance blogs, books and experts out there with sometimes conflicting advice, it can be hard to make sense of what you really should do.
We’re bringing it back to the very basics. If you set aside just 30 minutes each week for the next month, your finances will be in better shape than they are today. Knowledge is the ultimate power when it comes to managing your money. Here’s how to do it in a few short weeks.
Week 1: Take your financial health vitals
There are so many different components to your financial health. Think of it like a well visit to your doctor — you need to get your temperature and blood pressure taken before you can troubleshoot the big stuff. The same rule applies to your money.
This first week, get down and dirty with your bank accounts. With no judgement, note whether you have any debt (credit cards, student loans or otherwise), make a list of all of your accounts and see how they’re doing. Take note of what your regular income is: how much money you’re getting in your paycheck or from your side hustle after taxes and expenses.
Your goal this week is to get a bird’s-eye view of what’s going on before you go in with a plan of attack. Repeat this vital sign check-in monthly to make sure everything is running smoothly.
Week 2: Budget the way that works for you
Creating a budget that you can stick to is probably the hardest step. Budgets are often treated like a fad diet with a list of things you can and can’t have, but that’s not sustainable. A few weeks later, you fall off the wagon. A truly great budget is flexible and tailored to your needs.
If you have a budget that’s working for you, congratulations! You’re ahead of the game. If you need to start from scratch, take a look at your receipts and credit card statements from the last three months. Go through every single item and tally up how much you’re spending in different categories, like food, entertainment and home expenses. Surely you’re spending more money on something than you realized.
Challenge yourself to take some of the money you’re spending on things you don’t care about — maybe taking cabs, ordering takeout or shopping online — and reallocate those funds to something else. Maybe you need to pay off your debt or want to start an emergency fund. Those are great places to put some of the money you were spending on, say, impulse buys at the drugstore.
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And most importantly: Check in on your budget frequently. Whether it’s every day, every time you buy something or just once a week, keep a spending diary so you know how your habits are changing in real time. Give yourself a reward every time you track on schedule.
Week 3: Save for the future
This week, set up an automatic transfer from your checking to your savings account each time you get a paycheck. Saving can be a daunting task, especially when you are tight on funds, so don’t think of it as saving. Instead, think of it as paying your future self. Use the out of sight, out of mind principle and automate your savings, transferring it into accounts that you don’t necessarily see every day.
Remember, it’s OK to start small and build up your goal over time. Make sure you are not easily tempted to spend this money. Keep it out of your checking account, and even put your savings account in a different bank if you can.
Think about your savings goals, too. If you don’t know where to start, an emergency fund (a few months’ worth of expenses set aside for unplanned emergencies, like losing your job) or saving for retirement are great goals. Consider your short- and medium-term savings goals, too: like going on vacation, buying a new couch or saving for a down payment on a home. Once you are working toward your e-fund and retirement goals, you can expand your savings to those categories, too.
Week 4: Invest Smartly
Investing can sound like a big financial risk, but it’s actually a smart way to grow your money over time. Investing doesn’t only mean day trading stocks or putting a lot of money into a few companies; it can be as simple as your retirement account.
Check in on your retirement account this week and make sure it’s invested, not just being saved. You want your money to be earning interest and appreciating over time. One common type of investment fund to look into is a target date fund, where you select the approximate year you plan to retire, and the investment changes over time — more aggressive and risky when you’re younger and more conservative later when you’re closer to needing the money.
If you’re interested in starting to invest, make sure that emergency fund is fully stocked first. The stock market is not a place to keep your rainy day money. Do some research on mutual funds, index funds and exchange-traded funds. These funds are managed by a third party, and there are tons from which to choose. You can pick by sector, by risk level or even specific social issues, like women-led companies or environmentally responsible companies.
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If you do already invest outside of retirement, check in on your accounts this week. What are they doing, and is your money working for you? Don’t be afraid to move things around as needed.
Hopefully at the end of this month, you feel more in control of your finances. You can repeat this month-long exercise as often as you’d like to keep things running smoothly. Knowledge is power when it comes to your money. Just by checking in, you’ve done half the work!