Did you know that if you spent just 20 minutes a week focusing on your finances, you’d have spent a total of 17 hours on your money in just a year?! Okay, okay, I know what you’re thinking. “Uh, Jess, 20 minutes a week is nothing.” or you’re thinking, “20 minutes a week?! I don’t have that kind of time.”
Oh, friend. Here’s the deal. You can’t afford not to have time to pay attention to your money. And the reality is if you look at that smartphone in your hand and pull the amount of time you’ve spent this last week on social media, chances are it’s been hours of your time. You have 20 minutes. You may not want to spend your time on your finances, but the reality is, nobody is showing up at your door doing your finances for you.
So, let’s come up with a game plan! Below are 20-minute tasks you can do – either do them all this week or spread them out. Make sure to put these on your calendar, or you’ll forget.
1. Set Up Sinking Funds
The key to keeping your money flowing when life gets crazy is to have certain Sinking Funds set up. Does your family scramble every Christmas trying to pay for it (or worse, do you sink further into debt for pay for Christmas every year)? If so, you definitely need a Christmas Sinking Fund! This is a separate checking account (set it up at an online bank) where you put just a small amount of money into from every paycheck. Then come Christmas time, you grab that debit card, and that’s where you spend your Chrsimtas-related expenses.
Same thing with vacations. Does your family struggle to pay for a family vacation every year no matter how frugal you attempt to be? If so, you need a Vacation Sinking Fund! Same process at the above for the Christmas Fund. Rinse and repeat.
Come up with a list of Sinking Funds to set up and start setting them up today. You don’t have to contribute to all them right away. Just start contributing to the one(s) that are most important right now. (For more on Sinking Funds and figuring out a threshold amount, head here to this video).
Possible Sinking Fund Ideas:
- Christmas Sinking Fund
- Vacation Sinking Fund
- Kid/Sport Sinking Fund
- Auto Maintenance Sinking Fund
- Home Maintenance Sinking Fund
- Health Sinking Fund (if you don’t qualify for an HSA or FSA)
- Pet Sinking Fund
- Tuition Sinking Fund
- Yard Project Sinking Fund
- Remodel Projects Sinking Fund
2. Review Your 401(k) Contributions
Do you have a 401(k)? If so, do you know how much you contribute every paycheck? What about if your employer offers a match? Do you even know how your 401(k) is performing? No matter how old you are or how long you’ve been contributing your 401(k) if you don’t have the answers to those questions, you need to find them.
Call up HR and ask if your company offers an Employer Match. This is part of your compensation package so take advantage of it! It can help you get closer to retirement faster! If you don’t know how much you contribute every paycheck, look at your pay stub or contact HR and ask how you can get access to your pay stub if you have direct deposit. Log into your 401(k) (or contact HR to find out how to do this) and look over your investments. How are they performing? What is your Asset Mix? Does that mix still make sense for you?
If you’re younger and have more time to invest in the Market, you can afford to be Aggressive (and maybe should be). But if you’re closer to retirement age (within ten years), you need to scale back to more Conservative investments to protect the money you’ll need in retirement.
3. Calculate and Save Your Emergency Fund
Do you have a six-month Emergency Fund? If not, today’s the day to figure out how much you need to save in the Fund. Your Emergency Fund is not a Sinking Fund. It’s your safety net for when life jumps up, smacks you in the face, and then runs you over. Because trust me, friend, it’s not a matter of if something major happens but a matter of when something major happens. Are you doing to be financially prepared for it?
Look over your essential expenses for one month. Tally them up. Then multiply that number by six. There you have it! Your six-month Emergency Fund number! Now, don’t get overwhelmed. As I say in my book, Getting Good with Money, you don’t need to save that full amount right this second. But you do need to save at least a Starter Emergency Fund of one-months worth of essential expenses ASAP. This will help you navigate life as you work to stabilize other areas of your finances.
4. Make a List of All Your Subscriptions & Free Trials.
When we aren’t paying attention to our money, we can end up paying for things that we never had any intention of actually using. That’s why you need to review your subscriptions and the free trials you’ve recently signed up for. What subscriptions can you cancel? Do you keep skipping a month on that Fabletics subscription? If so, do you really need it? When’s the last time you watched Netflix, Hulu, or Apple TV? If you’re not regularly watching those services, cancel them. What about the gym? I know, I know. It’s all the rage right now to look super healthy and fit by posting those gym selfies and being able to say that you belong to XYZ gym in social circles. BUT – are you actually getting your money’s worth? Do you really use it? If not, cancel it and don’t feel bad. Go for a run instead. You’ll feel better. I promise.
5. List All of Your Debts – Including the Mortgage.
I get it. We’re the weird people that paid off their mortgage. I know that’s not something everyone desires, but I firmly believe that you should still look at your mortgage for what it is – a debt to be paid. That’s all. I just want you to see it as you do any debts that you have – it’s money you owe. Period.
But that’s also why I want you to list out all of your debts, including the mortgage. That means credit cards, student loans, boat loans, car loans, wedding loans, personal loans, mortgages, home equity line of credit, and the money you owe your sister-in-law. You get the idea. Now I want you to write out the minimum payments on each one of those debts and tally them up.
That, my friend, is how much debt is eating your income. Do you like that number? What else could you do if you didn’t have to pay that every month? I know for us, when we became consumer debt free, it was the largest pay raise we’ve ever had – and we were the ones that gave it to ourselves! And that could be the same for you. If you constantly feel like you can’t get ahead in life, but you have a mountain of debt. Well, that’s why you feel that way. Your debt is eating your income, and the more debt you take on, the more it eats your income.
So make a plan. What debt will you work hard to pay off before the end of the year?
Alright! There you have it! Five 20ish-minute tasks you can do this month to improve your finances this year!
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