January Money Challenge: Build Your Financial Fund

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In 2019, we’re bringing monthly financial troubles back to Two Cents (you can see the 2017 version here ). Each one is designed to help us focus on different aspects of our money and, ideally, turn small changes into measurable differences in our financial lives .

However, these monthly challenges are not focused on gimmicks or temporary, one-off changes , but on our holistic financial health . Rather than providing twelve separate tasks like in previous years, this time each month will build on the previous months, offering us a better understanding of our entire financial life by the end of the year.

However, before we get into the juicy details, we need to grasp the basics a bit. We need to make sure we have a solid foundation on which to build. Let’s see how things are going this month.

Week 1: see where you stand

In the first week of this month, we are taking stock of our finances and preparing to make changes. This may seem unnecessary since we’ve spent a lot of time planning and organizing over the past few weeks, but ideally, if you set aside a few hours now, you’ll sacrifice less time later. The goal is to set yourself up for continued success, and this requires upfront investment.

So, first, pick a date and time when you can devote at least an hour (but probably more) to checking your finances. If you are married or in a regular relationship, your significant other should also be present. You want to avoid distractions and you want to choose an environment that is comfortable yet productive, such as in the kitchen or home office.

Then create balance as described here . You want to manage your assets and liabilities so that you know your net worth, but also that you have a real idea of ​​where your money is going, how you save and invest.

While you are doing this, you don’t have to worry about taking the extra step and organizing your financial documents / passwords so that everything is easy to find when you need it. I use Microsoft OneNote to organize my life, but others use Evernote, Google Keep, or an old Google doc outline. Find the one that works best for you.

Then write down your monthly net income. Here’s how much you take home after taxes, 401 (k) contributions, medical benefits, and more. It should be pretty easy to find on your paycheck. If your salary fluctuates from week to week, be specific as possible.

Then, I bet you foresaw this, start tracking your spending. You can do this with an app like Mint or Personal Capital, or a more complex program like You Need a Budget. Personally, I have been using DollarBird lately which is more user-friendly than the other apps listed here and doesn’t connect to your bank account. In an ideal world, you will always know where your money is going, but for many, this is simply unrealistic. But at least try to do it before the end of the month and reward your partner.

Then relax. You have the basics of your finances on paper (or in an app), and you’re done with the first week.

Week 2: Decide in which area (s) work is required

Once you get a bird’s eye view of your finances, you can identify pain points and prioritize your goals. If you’re stuck with a choice between adding extra funds to your emergency fund or paying off your credit card debt, for example, here’s a breakdown of what to do first.

If your finances are in relatively good shape, then according to financial advisers, in 2019 you need to take a few monetary steps . Again, if you have a partner or spouse, discuss what your goals are and what areas of your finances need love the most. Ask yourself these questions to understand exactly what you want:

Then it’s time to read. Want to know more about how much you need to retire? Why invest? How do you manage healthcare costs? There is no shortage of information that you can bookmark and read throughout the week and in the months to come. Here are some Lifehacker articles depending on your goal:

Pay the debt off

Invest wisely

Save / earn more money

To buy a house

General rules to follow at any age

Week 3: implementing changes

Now that you’ve done your research (and are still tracking your spending), it’s time to make a change. Depending on how you feel and your financial situation, it can be small or large . But it takes a lot of effort to achieve one of your financial goals.

Some ideas based on different goals:

Take some time to reflect on how you feel about tackling one specific financial challenge this month.

Week 4: Keep up the good work

Now that you know how easy it is to take steps to improve your financial future, keep up the good work in week four. Nothing drastic should happen this week; keep tracking your spending by keeping track of where your money is going. Before shifting your focus, consider doing another small financial case.

Throughout the rest of the year, you will reflect on where you have come since January and make the necessary adjustments. But in February, we’ll be tackling one of the most important topics in personal finance: investing and why the hell should we still be doing it in these uncertain times.

Next month: sort out your investment.

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Personal Finance

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