Your Month-to-Month Guide to Extreme Money Confidence
FEBRUARY: Ask, "What's in this for me?"
If you're trying to get a handle on your money because, Well, I know I'm supposed to, you're handicapping yourself. "That doesn't work for most people," says Farnoosh Torabi, author of You're So Money. "You need a carrot." Whether that's saving for new boots or getting out of debt so you can buy a house, make it a concrete goal, and write it down or start a pinboard. "Visualize what that house would look like, down to the paint color," Torabi says. If you can't help but think of the hurdles to getting there, that's good: In a recent study, people who imagined their goals and possible obstacles were more likely to succeed than peers who simply thought positively. Do not skip this task! It's a fun one, and it makes everything that comes next more meaningful.
MARCH: Get yourself organized.
If you're trying to get a handle on your money because, Well, I know I'm supposed to, you're handicapping yourself. "That doesn't work for most people," says Farnoosh Torabi, author of You're So Money. "You need a carrot." Whether that's saving for new boots or getting out of debt so you can buy a house, make it a concrete goal, and write it down or start a pinboard. "Visualize what that house would look like, down to the paint color," Torabi says. If you can't help but think of the hurdles to getting there, that's good: In a recent study, people who imagined their goals and possible obstacles were more likely to succeed than peers who simply thought positively. Do not skip this task! It's a fun one, and it makes everything that comes next more meaningful.
APRIL: Put your bills on autopilot.
With your stuff in order, you can get smarter about your accounts. About 60 percent of American households that are online automate at least one bill payment. But 100 percent of financial experts recommend doing so. "It's the easiest way to avoid late-payment and interest charges," says Joe Buhrmann, manager of financial security support at Country Financial. "Plus, with postage prices these days, you're spending $6 a year for the privilege of paying your utility bill, your cable bill, your rent. Each!" Worried you'll get hit by an unexpectedly gigantoid cell phone bill or lose track of your spending and end up overdrawing? Use an app like Level, which tells you how much you have to spend each week after accounting for your bills.
MAY: Meet your Wanda.
"I think it's the job of your younger self to take care of your future, older self, but we're so disassociated from it," says financial educator Tiffany Aliche, who blogs at thebudgettnista.com. Her solution: "I've named my 80-year-old self Wanda. When I have a spending decision to make, I think, Is this a good choice for Wanda? or I'll catch myself thinking, If I do this, Wanda's eating cat food!" Give Wanda a gift this month: Use a website like Betterment, Blooom, or FutureAdvisor to get low-cost investment guidance on retirement accounts. For example, for $15, Blooom will comb through your 401(k) or 403(b) to tell you how your money could be earning more. (If your account has less than $20,000 in it, the site will do it for $1.)
JUNE: Find out what's throwing you off.
Most of the time, when your budget gets knocked for a loop, it's not because you disappeared into a rager in Vegas—it's because you needed new tires, had to pay for camp, or got hit by a dental bill. "These feel like surprises, but most of the time they're not," says Jesse Mecham, founder of youneedabudget.com. "If you have a car, it's going to require fixing now and then." To minimize the damage, Mecham suggests this: Go online and pull up the last 100 to 200 transactions on your bank account and credit cards. "Scroll through, letting your eye find big outflows," he says. "You're looking for large, infrequent expenses—like car repairs or holiday spending." For anything that's likely to repeat, start putting a bit of money aside. That way, the $600 new-tire tsunami becomes gentle rolling waves of less than $9 a month.
JULY: Buff up your credit score.
Pull a free credit report from annualcreditreport.com, and look it over for any information that doesn't seem right. That can be major stuff—a mortgage in Phoenix? When you were 6?—or any old blemishes, which are supposed to clear after seven years. Register disputes online with each of the big three agencies: Experian, TransUnion, or Equifax. Beyond that, Aliche suggests using one credit card solely to pay off a small recurring charge, like your Netflix bill. "Just paying a debt to zero can make your credit score take a huge jump," she says. "I raised mine 100 points over a year." This will affect not only whether you're approved for big purchases down the road, but how much interest you pay, potentially saving you thousands.
AUGUST: Start thinking reindeer.
It might sound nuts, but making your holiday lists now lets you take advantage of the next five months of retail bargains (like inventory-clearing back-to-school deals on toys) and sharpens your eye for holiday decorations being offered at summer's final yard sales. "Thanksgiving and Christmas will creep up faster than you know," says Cait Flanders, founder of the award-winning site Blonde on a Budget, who also suggests setting up budget goals for holiday gifts, food, and entertainment. Much easier to be sane about it when you're not surrounded by tinsel.
SEPTEMBER: Do a mid-ish year correction.
For a lot of us, summer's the biggest spending season of the year—think vacations, home renovations, the cocktails that start early and don't end until a very late sunset (just us?). Once September hits, Flanders says, "you'll know how much you really spent." And you can refresh your budget—or your resolve—with your newfound knowledge of how much you're spending, and where (see your tasks in March and June). "Don't feel bad," says Mecham. "Plans are supposed to change when you get more up-to-date information. Coaches don't feel bad when they change the strategy at halftime." Doing this is what sets true money masters apart from the constant worriers.
OCTOBER: Deal with your what-if's.
While bills come knocking on your door each month, other important financial matters play coy, seldom reminding you that they need tending to. But boy, do they, and taking care of them before winter accident season is a good idea. Wills, insurance, and beneficiaries all need to stay current with life changes like marriage, divorce, the birth of a child—even, in the case of home insurance, the awesome porch you just added. "You need to take a look at these things at least once a year," says wealth advisor and author Linda P. Jones. (An important thing to know is that, legally, the name on the beneficiary on your retirement accounts will override anything you put in your will.) You can start educating yourself on policygenius.com, an insurance marketplace that offers a checklist for life, renters, pet, and long-term disability insurance. On phroogal.com, you can get your questions answered by financial pros who are ranked on the usefulness of their answers.
NOVEMBER: Bring in more bucks.
"There's only so much you can do—or might want to do—to cut back your budget," says Torabi. "So it's good to get in the habit of thinking, How can I make more?" The classic answer: Ask for a raise. After a few lagging postrecession years, companies are starting to hand them out again. A survey by careers site LinkedIn found that January was the most popular month for this to happen. So ask now, before next year's budget is all carved up, and before holiday vacations and end-of-year torpor take hold. Want more extra-cash ideas? Check out redbookmag.com/moneymakers.
DECEMBER: See how much you're worth.
Think of net worth as your monetary BMI: an admittedly imperfect, but useful, way to bubble down your financial health to one number. Sites like Bankrate, Investopedia, and even CNN all have calculators that can guide you through adding up your assets and subtracting your liabilities. Why should you bother with something that sounds so one-percenty? "You see the progress you're making," says Jones. "In a bad economic year, like 2008, you may go backward—if your house's value falls, for example—but then you also see how eventually you get through that and things bounce back." Flanders likes to do this every December, writing down her debts and goals for the next year while she's at it. "It feels so nice to start a new year knowing exactly where you're at and where you want to go," she says.
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