Improve Your Finances with a Personal Money Day Checklist
Money Girl explains how to use a Personal Money Day checklist to save–and even make–more money.
Laura Adams, MBA
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Improve Your Finances with a Personal Money Day Checklist
If you’re like most people, there are financial tasks on your “to do” list that keep rolling over from month to month. Instead of procrastinating, it’s time to take control of your finances!
In this episode, you’ll learn how to use a Personal Money Day checklist to knock out 6 critical financial tasks.
When you focus your time and attention on these tasks (sooner, rather than later), you’ll make and save more money. Plus, having a brighter financial future will make you feel more secure and confident..
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What Is a Personal Money Day?
Many of us have reasons (ahem, excuses) for why we haven’t completed financial tasks like switching to a better bank, starting an IRA, or shopping for less expensive insurance. Work and family responsibilities can get in the way of upgrading our financial lives, even when we have the best intentions.
The smartest solution I know to quickly improving your personal finances is called a Personal Money Day. It’s a full day that you block out to focus exclusively on your money. You commit to working on nothing but your personal finances–and I mean, nothing!
Your Personal Money Day could be on a weekend, or on a day that you don’t normally work–or you might take a paid or unpaid vacation day off from work to focus on this. Choosing a weekday is the best option, because businesses and financial institutions that you may need to contact will be open.
I know taking time off and not doing something you really enjoy is a sacrifice. But consider this: if you don’t do something different for your finances, you won’t get different financial results, right?
I can promise that completing a simple checklist will repay you many times over! Then you can use that money to go on a real vacation, or even retire from work altogether, ahead of schedule.
Prepping for Your Personal Money Day
Before your Personal Money Day, take some time to get prepared: Clear your schedule. Gather any documents or information you might need. Have a discussion with other stakeholders, like your spouse or partner, who might want to participate or help you avoid unnecessary distractions.
Don’t let anything prevent you from making real progress as you work through the following checklist tasks:
Task #1: Create a Personal Financial Statement
Task #1: Create a Personal Financial StatementYour Personal Financial Statement (PFS) is a tool that gives you a bird’s eye view of your current financial situation. I recommend that you create a PFS, and update it every year for a periodic reality check.
The purpose of a PFS is to calculate or recalculate your net worth, which tells you a great deal about your overall financial health.
What’s net worth? It’s a simple formula: net worth = assets – liabilities.
Assets are what you own, like a home, car, or investments. Liabilities are what you owe, like a mortgage, car loan, or credit card debt. When you subtract your total liabilities from your total assets, you’ve calculated your net worth. It’s really that simple. For instance, if you have $150,000 in assets and $125,000 in debts, your net worth is $25,000.
For more detail on creating a PFS, read chapter two of my book, Money Girl’s Smart Moves to Grow Rich. You’ll also find my quick and dirty formula to know what your net worth should be for your age.
Task #2: Set Financial Goals
After you get a clear picture of where your personal finances stand today, based on the PFS you’ve created, consider how you’re doing. Maybe you don’t have any retirement savings, or have a shockingly large amount of debt that’s weighing you down.
An important part of your Money Day is to set some financial goals for you and your family. Think about how you’d like your financial life to look in 5, 10, or 20 years.
Here are a few suggestions for goals that could really improve your financial health:
- Establish an emergency fund equal to 3 to 6 months of your living expenses
- Participate in a retirement plan at work or open up an Individual Retirement Arrangement (IRA) on your own
- Increase your retirement savings to 10% to 15% of your gross income.
- Pay down debt by tackling the most expensive or highest-interest balance first and then working down to less expensive debt.
Goals keep you on track because they give you something specific to work toward. Write them down so you can revisit your progress each year and make necessary adjustments.
See also: 7 Days to Healthier Personal Finances
Task #3: Create a Spending Plan
Now that you know where your finances are and where you’d like them to be in the future, it’s time to close the gap between the two. The best way to do that is to really understand where your money goes.
If you don’t already have a budget, or what I prefer to call a “spending plan,” consider this: you can’t change what you don’t measure. If you have no idea how your income is being spent, you won’t be able to manage your money effectively.
A spending plan is simply a plan for how you intend to manage your money. It makes sure you account for your financial goals, in addition to all your living expenses. Of course, the total of all your spending should never exceed your take-home pay, otherwise you’re living beyond your means and could get into serious financial trouble.
You can track your spending on paper using an Excel spreadsheet, a Google Doc, an online application such as Mint.com, or financial software like Quicken.
The goal of a spending plan isn’t to make you miserable. Focusing on where you can free up money to accomplish what’s truly important to you and your family should get you excited!
You can learn step-by-step how to create a spending plan that will really work in chapter two of my book, Money Girl’s Smart Moves to Grow Rich.
See also: Smart Moves for Guaranteed Financial Success
Task #4: Choose the Best Bank Account
Use your Personal Money Day to evaluate if your bank accounts are the best fit for you. Everyone needs a checking or payment account for day-to-day spending, paying bills, and depositing money. Make sure your checking account:
- charges no monthly fees
- requires no minimum balance
- offers unlimited transactions
- has online banking
- has free online bill pay
- reimburses you some amount for automatic teller machine (ATM) fees
- is FDIC-insured
If it falls short, you need a better bank or credit union. Use sites like Checkingfinder.com and Bankrate.com to shop for better options. If you’re worried about the logistics of switching, be sure to listen to my previous podcast, How to Switch to a Free Bank Account in 5 Simple Steps.
Additionally, you need a savings account for your emergency money that pays some amount of interest. Your checking and savings accounts can be at the same or different institutions
Task #5: Review Your Retirement Savings
If you’re not already making regular, automated contributions to a retirement account, use your Money Day to get started. If your employer offers retirement plan, such as a 401(k), 403(b), or 457, get enrolled now!
If not, opening up a traditional or Roth IRA is really easy at sites like Betterment, Motif, and ETRADE.
Retirement accounts give you special tax breaks that allow you to pay less tax, save more, and grow your retirement nest egg as quickly as possible. You choose from a menu of investments, such as stock and bond mutual funds, and can reallocate your money at any time.
See also: Your Guide to the Roth IRA
Task #6: Shop Your Insurance
Most of us don’t shop our insurance coverage nearly as often as we should. It’s easy to make sure you’re not overpaying by getting free quotes for car, home, life, and health insurance from sites like insuranceQuotes.com or Autoinsurancequotes.com.
Statistics show that most renters don’t have renters insurance, even though it’s very inexpensive (about $185 per year on average nationwide.) If you rent a home or apartment, you need a renters policy to protect your personal belongings and legal liability.
Term life insurance is another inexpensive product that most of need. For instance, if you have family who depend on your income–such as a spouse, partner, child, parent, or grandparent–you need life insurance to protect them if you aren’t around.
Having enough of the right kinds of insurance is critical to keeping you and your family safe from an unexpected catastrophe or hardship. But you should never overpay for too much insurance. If you’re not sure what coverage you have, call your company or agent for a review.
How to Save More Money
Once you’ve completed these 6 major financial tasks, consider additional ways to save more money. Could you get a better deal on your internet, cable, or cell phone plans? Could you find a less expensive apartment? Call companies or do online research to see how you can cut your monthly expenses.
You might also think about making more money by selling unused items online, looking for a better-paying job, or starting a freelance side-hustle. You know better than anyone what important tasks you’ve been putting off that could make a big difference in your financial life. So open your calendar right now and schedule a Personal Money Day!
See also: Your Credit Score Survival Kit (a free video tutorial, ebook, and audiobook)
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Photos of calendar, checklist, Piggy Bank with calculator, Piggy Bank with tape measure, retirement sign, and Young Man Holding Bill courtesy of Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.