From budgeting to planning for retirement, managing finances can be overwhelming for most people. April Lewis-Parks, director of education at Consolidated Credit says thirty days is the optimal amount of time needed to get your money matters in order.
“If you outline a 12 month or 24-month plan, often times you will be discouraged,” she says. “It’s not small enough to see progress right away. In a short amount of time, they can see progress and understand the different steps that need to happen to get to the next level financially.”
Day 1-5 – Budgeting
Lewis-Parks says the first week in the 30-day plan should focus on budgeting.
- Calculate your monthly income
- Create a bill calendar or automate your bills
- Identify at least one spending leak to cut out of your budget
Day 6-10 – Saving
After your budget is in place, she says it is time to look at your savings.
- See how much extra money you have after taking care of the essentials
- Save at least 10 percent of your income in a savings account
- Save three to six months of expenses for emergencies
- Shop around for the best savings account to help your money grow as much as possible
- Outside of a savings account, identify at least one other place where you can save money
Day 11-14 – Basic needs management
What do you need to survive each month? Within those needs, look at the areas where you can cut down on spending. Lewis-Parks says there are small things everyone can do.
- Replace bulbs with energy efficient ones
- Set the temperature on your heating, water, and air conditioners according to the manufacturer’s optimal settings
- Clean out dryer vents to help lower energy bills
- Review your mobile phone plan for special discounts or consider switching carriers if it makes sense
Day 15 –17 – Banking
Roughly halfway through the 30-day plan, Lewis-Parks advises consumers to take a close look at their banking.
- Check your banking fees to make sure you are not spending extra in areas you don’t need to
- Divide your direct deposit to help you save and reach your financial goals
- Get the most out of your credit cards with the lowest interest rates and perks such as travel rewards or cash back
Day 18-20 – Healthcare costs management
While everyone’s healthcare needs are different, she says these tips can help most people save money.
- Before visiting a doctor, review your policy to see what items are covered
- Know how much you are paying out of pocket for doctor visits
- Look into cheaper generic prescription alternatives
- Take advantage of discounts and rebates on preventative care if you are able to
Day 21-23 – Credit management
Lewis-Parks says credit can be tricky for most consumers who do not how to manage it correctly.
- Request free copies of your credit report from the three credit reporting bureaus at www.annualcreditreport.com every 12 months
- Once you review your credit reports; highlight any errors or discrepancies
- If there are discrepancies, go to the credit bureau online and fill out the forms to correct the errors
- Check your credit score at www.myfico.com
- If your score is under 700, you should take steps to improve it
Day 24-28 – Debt management
The next five days, she suggests reviewing your credit cards and loans.
- Look at the interest rates and the terms on all of your credit cards and loans
- Prioritize paying off debt by taking your cash flow and putting it toward the debt with the highest interest rate
- After you've paid off a debt, take that extra money and allocate it to the next highest interest rate account
- If your interest rate is high and your account is in good standing, try asking your credit card issuer to lower the rate
- Keep an eye on your utilization rate – how much credit you are offered on a particular card and how much of that credit have you used
- A utilization rate of over 30 percent can hurt your credit score
Day 28-30 – Retirement planning
Take the last three days of the plan to focus on your retirement readiness.
- Enroll in your employer’s 401(k) program if they have one
- If your employer offers a 401(k) match, take advantage of it
- Even if you have a 401(k), consider opening a separate retirement account, such as an IRA
Now that you have decided to start the 30-day plan, it is necessary that you follow each step to the letter? Lewis-Parks says it’s best to stick to the exact order starting off, as the plan is designed to build upon each step.
“The next 30 days, once they have gone through the process they can ask, what was the biggest hurdle for me? Did I finish my healthcare assessment? Did I make a lot of strides in my retirement planning? If not, then the next 30 days they understand where they need more focus," she says.
Linda Bell joined FOX Business Network (FBN) in 2014 as an assignment editor. She is an award-winning writer of business and financial content. You can follow her on Twitter @lindanbell