![\"21-days-to-positive-money-habits\"](\"\/\/www.savingadvice.com\/wp-content\/uploads\/2008\/03\/21-days-to-positive-money-habits.jpg\")
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It is an accepted part of self-help wisdom that it takes twenty-one days to develop a new habit and make it stick. This has been found to be true in weight loss, smoking cessation, reducing alcohol consumption, and many other regimens designed to create positive money habits. It can also be applied to your finances. If you are having trouble getting motivated to create a better financial life, a dedicated effort over just twenty-one days can create better money management habits.<\/p>\n
Of course, it\u2019s not a miracle cure. If you\u2019re in deep financial trouble you certainly won\u2019t be able to solve all your problems or pay all your debt in twenty-one days. That\u2019s not the point. What you\u2019re trying to do over these twenty-one days is to lay the foundation for tackling your money problems over the longer haul. You use these twenty-one days to create better financial habits so you can get out of trouble and avoid getting in trouble next time. If you\u2019re doing nothing about your finances, these twenty-one days can get you started on the basics.<\/p>\n
Below are twenty-one things you can do to create better money management habits. Each one is small enough to be done in a day. (Depending on your situation it may require a long day, but it can be done in a day.) Do one thing per day (you don\u2019t have to do them in order) and you should be on your way to better money management habits. If you can go for three weeks without falling back into your old patterns, you stand a better chance of coming out on the other side with new, ingrained, money management habits.<\/p>\n
This sounds like a \u201cduh,\u201d but you can\u2019t make a plan without knowing exactly how much you owe and to whom. It\u2019s time to come clean. List all loans, lines of credit, HELOC\u2019s, credit cards, \u201cX months same as cash\u201d offers, 0% financing, etc. List everything, no matter how small, including that $10 you owe your coworker for lunch last week. If you don\u2019t know what you owe, you can\u2019t create a plan to become wealthier.<\/p>\n
Doing this is pretty simple, you just need a piece of paper, or a computerized spreadsheet.\u00a0 Then you list everything you owe, the amount of the monthly payments \u2014 and how expensive the debt is (or the interest rate you\u2019re paying on it).\u00a0 Then think about how you you want to pay it off.\u00a0<\/p>\n
Tally up all your assets, including cash, 401(k)\u2019s, IRA\u2019s, stocks\/bonds, your change jar, and the money in your mattress. If possible, include an approximate value for your house, if you own one. Don\u2019t count \u201cexpected\u201d money like tax refunds or inheritances until you have them. Expected money is not money you have. Many people have no idea how much they have (or don\u2019t have).\u00a0 It is hard to create any sort of financial plan without knowing exactly how much you have.<\/p>\n
Figuring your net worth is very simple.\u00a0 You just subtract how you owe from how much you have (your assets minus liabilities). This is your net worth. It\u2019s a handy number to know. If it\u2019s positive, you\u2019re doing some things right and you want to keep heading in that direction. If it\u2019s negative, you\u2019ve got problems and need to work on them ASAP. It\u2019s not a number that matters to anyone but you, but it is a good indicator of where you\u2019ve been and where you\u2019re heading.\u00a0 Its important to do this regularly.\u00a0 This is because what gets measured, gets improved.\u00a0<\/p>\n
As surprising as this sounds, many people don\u2019t know how much income they have.\u00a0 Many people often bring but not how much they actually bring home each month. Figure out what you actually bring home after taxes, insurance, flex spending, 401(k) and any other deductions. You can also include interest you earn on savings, as long as withdrawing that interest won\u2019t cost you penalties. This is the amount you have to work with every month to spend, save, and pay down debt.\u00a0\u00a0<\/p>\n
You can get one free per year from each bureau at AnnualCreditReport.com. Check for inaccuracies, debts you\u2019ve forgotten about (if you find any, adjust your numbers in #\u2019s 1, 2 and 3), and anything else that doesn\u2019t seem right. Figure out a plan of attack for resolving any errors and cleaning up your report. A clean report makes it easier to qualify for car loans and mortgages, if you need them.<\/p>\n
You can find the website for annual credit report here.<\/p>\n
Whatever you do, don\u2019t pay to get your credit report.\u00a0 You can get it for free at annualcreditreport.com.\u00a0 Your bank or credit union may also be able to give it to you for free.\u00a0\u00a0<\/p>\n
Spending money is a fact of life.\u00a0 Everyone has spending drains.\u00a0 Some people like to eat out, some people collect things, some people can\u2019t part with their morning coffee. A lot of times these spending drains are almost unconscious.<\/p>\n
One good way to get a handle on your spending is to use a budget\/expense tracking app.\u00a0 These track all your electronic transactions, and categorize them.\u00a0 Good apps are Lunch Money (which is new, and well designed) and Quickens Simplifi product.\u00a0 Quicken\u2019s product is more developed, but Lunch Money is newer and better tuned into its users needs.\u00a0\u00a0<\/p>\n
You can find Lunch Money here,\u00a0 \u00a0Quicken is here.\u00a0<\/p>\n
Go just one day and spend nothing. Don\u2019t buy coffee, don\u2019t go to the drive-thru, don\u2019t stop at Target for \u201cjust one thing.\u201d Don\u2019t even buy gas. See how good it feels to go without spending for a day. Now try to add more no-spend days to your life.<\/p>\n
Pull out your bank and credit card statements and looks at the fees you\u2019re being charged for overdrafts, ATM withdrawals, late fees, account maintenance fees, etc. Figure out a way to eliminate these fees-call the bank and negotiate, stop doing whatever it is that\u2019s incurring the fees, or switch banks if they won\u2019t work with you.\u00a0 \u00a0<\/p>\n
Organization is not a bag or shoe box stuffed with unpaid bills. Create a system so that when a bill comes in, it goes into a holding area until it\u2019s paid. Put your bill paying supplies in one place to minimize the aggravation. Then create a system to keep records of your payments. Get a filing cabinet or file box to keep the receipts. If possible, automate as many bill payments as you can so you don\u2019t have to worry about it. Maybe you need to make a spreadsheet listing all bills and their due dates so you can check them off as you go. Clear the sheet at the end of the month and begin again next month.<\/p>\n
Here is a great example of what a bill tracker looks like:<\/p>\n
You can find this tracker here.\u00a0<\/p>\n
Many people buy something and simply toss the receipt.\u00a0 Store them in an envelope, labeled by month. Keep receipts at least until the return period has passed for the item. More and more stores are requiring receipts for returns. Not having the receipt could cost you. You also want to keep receipts until the purchases have cleared your bank account.\u00a0 \u00a0Keeping receipts also helps you in case you need to track your expenses.\u00a0 \u00a0<\/p>\n
Shred anything with personal or financial information on it to reduce your risk of identity theft. Shredders have really come down in price and they are worth the peace of mind. Right now Amazon is selling a great one![\"\"](\"\/\/ir-na.amazon-adsystem.com\/e\/ir?t=savingadvice00-20&l=am2&o=1&a=B00HFJWKWK\")
This is a good example:\u00a0<\/p>\n
Even if you use online banking or a money management program, reconcile your bank statement with your checkbook every month. Banks make mistakes or you might enter something incorrectly. Make sure you know that your accounts are correct every month. You may also catch expenses or income you didn\u2019t know you had.\u00a0<\/p>\n
Know what your homeowners\u2019, health, life, and car insurance policies cover and how much you\u2019re paying for that coverage. If you think you\u2019re underinsured, schedule a talk with your broker ASAP to set things right.\u00a0 You should also make note of when the policy premiums are due.\u00a0<\/p>\n
Once you know what you have and how much insurance you need, shop around to get the best price. What you already have may be the best rate going, but you won\u2019t know that until you shop around. Put this on your calendar and recheck rates each year.\u00a0<\/p>\n
Take the time to learn how to inventory your pantry and identify your needs. Write it all down on a list and then go shopping. Buy only what is on the list and avoid off-list temptations.\u00a0 Consider also getting into coupons or signing up for your grocery store\u2019s rewards program.\u00a0 \u00a0Mindfully planning your grocery spending should help improve your overall nutrition as well as keep your grocery costs capped.\u00a0<\/p>\n
Get a notebook, or a spreadsheet and write down every penny you spend today. This will give you an idea of where your money is going. Keep adding to this journal every day. At the end of a month, you\u2019ll have a clear idea of what spending areas you need to address.\u00a0 Getting apps like Lunch Money (mentioned earlier) or Quicken\u2019s Simplifi are helpful for this as well.\u00a0<\/p>\n
Once you know what you have coming in and going out every month, you can sit down and create a budget to better manage that flow. It doesn\u2019t have to be set in stone, but it does need to be realistic enough to give you a guide to follow as you work through your financial issues.\u00a0 There are literally hundreds of articles on how to create a budget available on the web, but a very simple and basic overview from the Federal Trade Commission is here.<\/p>\n
Education is a powerful tool when it comes to your finances. Today read one article or part of a book about a financial topic that interests you. Maybe you want to know more about investing or debt repayment strategy. Find something relevant to you and learn something new. Do this again another day and keep learning. Never stop.\u00a0<\/p>\n
Item 19 on the list of positive money habits is to start contributing to your retirement. Use your budget and your newfound knowledge about what you earn to figure out an amount you can set aside for retirement. Whether it\u2019s in an IRA, a 401(k) or a SEP, you need to be contributing something to retirement. Start with whatever you can afford and increase it gradually. Don\u2019t count on the government to take care of you in your old age.\u00a0 Most of the major brokerages like Schwab or Fidelity will help you open an retirement account and can get you started for just $5 or $10.\u00a0<\/p>\n
Open a savings account (or add to your existing one) and put something in there every month or pay period. Even a little bit is better than nothing. The more you have saved, the better able you\u2019ll be to weather down times or pay cash for things you need. Increase the amount you save as you are able. Many people find money challenges like the 365 day money challenge or the 52 week money challenge a great way to start saving small amount of money a day.<\/p>\n
Click here for a nice list of money challenges to try.<\/p>\n
Make certain your loved ones are taken care of if something should happen to you. Make sure you have a will and a living will so that your wishes are known. Assign a power of attorney. Set up a trust if necessary. Get disability and life insurance to replace your income if you die or can\u2019t work. Yes, these things cost money but the cost is a fraction of the trouble that will ensue if something happens to you and you are unprepared. Review these things each year to make certain no changes are required.<\/p>\n
At the end of these twenty-one days, hopefully you\u2019ve solved some of your financial problems and have a plan to deal with the rest. You\u2019re on your way to better money management habits. If you start to backslide, review these twenty-one days to motivate you to keep going in your new, positive direction.<\/p>\n