So when you ask how your money is feeling, you may also feel the pressure of not achieving what you set out to achieve during this year. And as we are counting down to a New Year, why not make an effort to take on the next 31 days to improve your financial life. Thanks to financial planner, Philip Taylor, for the check list.
Now while it is suggested that you do one activity over the next 31 days, there is no pressure. Take your time and do it right.
Taylor notes, “While I can’t promise you’ll be rich or completely debt free by the end of the 31 days, I can assure you that if you take action on the 31 tips, your financial life will be much better off this year than last.”
Let’s do this!
Day 1: Save JMD$1,000 a day for 31 days.
This can do a lot for your feelings of security. It’s also evidence that you are capable of living within your means, and (possibly more importantly) holding on to your savings.
Do this today: Open up a separate savings account and have money automatically deposited into the account each paycheck (or each month). You didn’t even have to think about it beyond that one time you setup the automatic deposit. You’ll be less likely to touch the money because it’s in a separate place. Out of sight, out of mind.
Day 2: Sell Your Excess Stuff
To boost your savings, you might want to sell some of your excess stuff (you know, the valuable things you have lying around the house that you never use anymore).
Do this today: Walk around your house and make a list of this things that you want to sell. Take pictures and list the items for sale online at significant discounts (think quick sale!).
The stuff you don’t sell in a week should just be given away for free or donated. Once you’ve collected your cash, deposit it quickly into your new savings account so that you keep the money instead of spending it on new stuff. After all, your goal is more savings, not more stuff.
Day 3: Add to your retirement savings account
The new year is a great time to adjust your retirement savings account. If you’re not contributing anything, then start…at least enough to get the company matching contribution. If you’re currently contributing 5% of your income, bump it up to 7%. If you’re currently contributing 10%, consider bumping it up to 12%.You get the point. Push yourself to contribute more.
Day 4: Review (and Fix) Your Credit Report
Yes, credit reports are now in Jamaica and you are entitled to one free report per year. We can also use this review to make corrections if necessary. It’s not uncommon for your credit reports to contain errors or fraud, and these issues can pop up at any time. So it’s a good idea to review your credit reports at least once a year, if only for this purpose.Before we close out this day, be sure to use the credit reports to make a list of your outstanding debts. We’ll use this list when we tackle getting out of debt in a few days.
Day 5: Get to Know Your Monthly Expenses
No matter the income level, financial success comes from consistently living below one’s means. This doesn’t require complicated spreadsheets and software. All you need is a pencil and paper. In fact, I almost prefer this method since it requires you to physically write down your expenses.
Day 6: Reduce Your Debt
Whether it’s debt on a credit card, a car loan, student loans, or your mortgage, owing money to someone else is a pain in the you-know-what. Most people get into debt because they ran into a tough time financially. Do this today: Take your list of debts and prioritize them by interest rate, amount, or level of emotional attachment. Start aggressively attacking the first debt on your list. Each month, plan to pay as much as you can afford on the highest priority debt, and pay the minimum payment on the other debts. Once you pay off the first debt, move to the next, and so on. This snowball approach works because you build momentum as you knock each debt down successively.
Day 7: Know Your Assets (and Net Worth)
Break out the old pen and paper or spreadsheet and start listing your assets: cash, bank accounts, investing and retirement accounts, your house if you own it, other real estate, your car(s) and other vehicles, jewelry and collectibles, expensive art or furniture, etc.Once you have this list totalled, you can subtract your debts and you’ll know your personal net worth. Is it positive? Do you foresee it heading in a positive direction in the future? Finally, create a home asset inventory. Take a video camera and make a sweep through your house video-taping the stuff in each room. Be sure to upload the video to the cloud or burn a copy to CD and place in your safe. This will be useful for insurance purposes in the case of a fire or burglary.
Day 8: Feed Your Financial Brain
There is always something new to learn and discover – some unique financial situation which I’ve yet to consider. That’s how it is. Proper money management is a language you never stop learning. That’s why it’s important to regularly consume information to help you in your journey. Commit today to learn something new each week of 2018.
Day 9: Save for Emergencies, Travel, a New Home, Etc.
On day one of this series I challenged you to save $1,000 a day.
Nothing disheartens you quicker than an emergency that drains all of your cash and forces you to go into debt. The best place to start in my opinion is by creating an emergency fund. This is money set aside to be used if, and only if, you experience a household emergency like a job loss, a major car or house repair, major medical expenses, etc.
Do this today: Make a list of all your future cash needs. Here are some ideas: emergency fund, a vacation, house down payment, Christmas gifts, annual bill payments like insurance or taxes, a new car, etc.
Day 10: Create Goals for Your Money
Do this today: Look back through the last 9 days and write down all of the little goals you’ve set for yourself. Did you decide to save $1,000. Did you decide to get rid of your debt?
Once you have your list of goals, take a moment to think about priority. Will you be able to do them all simultaneously? Will one need to be achieved before you can start on another? If so, designate that in your list of goals. It might also be useful to separate your short-term goals and your long-term goals. Lastly, don’t think of these goals as set-it-and-forget-it. You’ll need to occasionally re-evaluate where you are with your goals, considering possible life-changes and new desires.
Day 11: Plan a Money Date With…
Do this today: Schedule an hour to meet with your significant other about your money goals. Talk about days 1-10 of this series. Seek input from them about what they want to be doing with money. They may have come with their own list of goals.
If you are single, plan to go over your money goals with a trusted friend or family member.
Day 12: Get (or Renew) Life Insurance
If you earn an income and someone else (e.g. spouse, kids, etc.) depends on that steady stream of income to survive both now and for years to come, then you should probably consider life insurance.
Why? Because if you’re gone (tough to think about, I know), your dependents will be left without that income source.
Do this today: If you don’t have life insurance, and the policy that you get through work isn’t enough, then buy some. Calculate how much you need, get quotes for someone your age and health, and then take the steps to buy.
Day 13: Trim Your Expenses
Do this today: Take your list of expenses and label them as needs vs wants. If something is a want, think about eliminating that expense, if only for the short term. Now look at all of your expenses and decide if there are any that you could possibly pay less for.
Day 14: Create a Simple Budget
Do this today: Determine the expenses that fall into these variable categories. Decide to reduce those by 20%, 30%, or whatever percentage you feel is attainable. Put your simple budget down on paper and start following it this month.
Day 15: Organize and Protect Your Financial Records
Do this today: Do a search online for a list of financial records you need to keep. Take your list and start organizing your financial records into both physical and online folders, as well as a safe.
Day 16: Reduce Your Interest Rates
Do this today: If you’ve got a mortgage, haven’t refinanced in a couple of years, and plan on staying in the home for at least 5 more years, get a refinance quote and see if you can reduce your rate.
If you have credit card debt, call your credit card company and ask for a rate reduction. Finally, consider performing a balance transfer to either a new credit card or to a peer lending loan. See the resources below for more information on how and if you should execute the plans.
Day 17: Shop Smart with Lists and Coupons
Do this today: Commit to creating a shopping list for your next trip to the market or mall. Google “shopping list template” and print one of those out for when you’re ready to make your list. When you make you list, only include items that are necessary. After you make your list, do a search for coupons for your items. Also, do a comparison with items that can be ordered online (i.e. diapers).
Day 18: Consider the Individual Retirement Account (IRA)
The IRA is great because it allows you to contribute after tax dollars and allows those contributions to grow tax free. So when you withdraw the money in retirement you won’t have to pay any taxes on that money.
Do this today: Spend some time researching the IRA and see if it’s a good fit for you at this point in your financial life.
Day 19: Make a Will
Talking about making a will is a lot like talking about life insurance. It’s necessary, but it might make you uncomfortable. Do this today: If you don’t have a will and have kids or assets, then take action today to get a will completed. If you want to use a lawyer, then call today and make an appointment. Make plans with your spouse to work through the details at your next financial planning session.
Day 20: Spruce Up Your Online Profile
These days your online presence is becoming increasingly as important, if not more important, than your paper resume or business card. What people find when they Google your name is critical in growing and maintaining a healthy career or business.
Unemployed? Growing your online profile is an important part in helping you land a job.
Employed? Even if you are not looking for a better job right now, there’s no time like the present to increase your professional online profile.
Self-employed? Are you effectively using online tools to market your business and stay connected with customers and colleagues?
Do this today: Google yourself (or your business). What do you see? If nothing or not what you want, then start building a proper online presence.
Day 21: Save for College
Do this today: Spend some time looking at the different college savings options below. Choose one and begin automatically contributing a small amount to the account each month.
If you’re not quite ready to start contributing, at least open the account so you’ll have it ready. As your income grows and your financial situation improves increase your monthly savings amount.
Day 22: Stop the Junk EMail
Junk mail temps you to make purchases or make financial decision that you hadn’t previously planned to make.
Do this today: Visit the resources below and discover the websites and telephone numbers needed to opt out of junk mail. Log on to those sites today, or make plans to call them asap so that you can reduce the amount of junk mail you have coming into your home.
Day 23: Improve Your Credit Score
Do this today: Review the five factors that make up your credit score. Check your credit score . Determine if there are any quick steps you can take to improve your credit score. Take them. Finally, take the long-term approach: using credit wisely and making your loan payments on time from now on.
Day 24: Take On a Part Time Job
A quality part-time job is one that fits into your current schedule, pays well (obviously), and even provides other benefits. A part-time job could also be a way to break into a career or line of business that could end up meaning a bigger full time paycheck for you.
Day 25: Save on Auto Insurance
I’ve found that you can usually save on auto insurance by doing one of two things: changing your coverage level or getting a brand new policy. Changing your coverage level is as simple as reviewing your policy and taking a moment to understand if your policy contains the things you truly need.
Day 26: Give More Regularly
By giving regularly, you practice the discipline of sacrifice more regularly, not just when it’s convenient. Giving regularly also gives you perspective on the needs of others. Do this today: Make a list of the organizations that you’d like to support this year.
Day 27: Involve Your Kids
There are several ways that the act of involving your kids in your financial life can help to improve it.Do this today: Make a commitment to bring your kids into your financial world. Not so they can worry about money, but so they can master it. Check out the resources below and discover what and how to teach them.
Day 28: Get Spending Rewards
With so many nice opportunities to earn spending rewards today, you might be missing out on hundreds of dollars a year if you aren’t actively using a rewards program.Do this today: Look over the cash back programs available today (credit, debit, and cash-back shopping sites) and sign up to start using one or two of them. Tie as much of your spending as you can to the programs.
Day 29: Reduce Your Tax Burden
Taxes are a big part of our financial life. It’s hard to avoid them. We pay taxes on our income, our investments, our property, the things we buy, and a bunch of other things.
You gotta pay your taxes. But there are some things you can do to reduce the amount you pay in taxes, even as your income rises.
You can “shelter” some of your income from taxation or investment by using tax-advantaged accounts, like the Long Term Savings Accounts, IRA, and Education Savings Plan, as we previously discussed.
Day 30: Save on Health Care Expenses
When you factor in today’s insurance premiums and potential out-of-pocket expenses, quality healthcare can be very expensive.
Do this today: Make sure you have adequate health insurance and emergency savings so that a major medical issue won’t put you in deep debt. Getting a high-deductible, health savings account eligible individual health insurance policy is easy. Finally, make an appointment to get checked-out (visit a local health fair for a free check-up).
Day 31: Align Your Money with Your Values
What I’m talking about is the idea of tying your money (how you spend it, save it, and make it) to your own personal set of values.
If you do this, every financial decision you make (whether you are looking for a new job, setting goals for the year, or buying a pack of gum at the checkout line) is tied back to your values. Living this way means you’ll constantly be moving towards a life that is more and more aligned with your values. If you avoid doing this, next year you’ll find yourself wondering why your financial life isn’t turning out like you want.