Welcome to the first day of spring! Now is the best time to check up on your personal finances and tidy everything up. First, you’ll want to take an inventory of all of your financial plans and accounts to ensure they are in tip-top shape. But, second, I want to challenge you to improve your overall DIY personal finances this spring with a couple of actionable items. Here’s The DIY Millionaire’s spring cleaning challenge to you. Can you take it?
- Set at least 3 financial goals for this year. When you want to achieve something, it’s crucial that you have goals to motivate you. Challenge yourself to set 3 financial goals for the remainder of this year. For example, “I want to save at least $100 a month so that I can increase my savings.” If you started that goal this month and completed it by the end of the year, you’d have saved an extra $1,000! Here’s another one: “I want to start to invest in my 401(k) by the end of March so that I can plan for my retirement.” Can you set at least 3 financial goals for yourself that are realistic? After you think of them, write them down on paper and track your progress throughout the year.
- Find at least 2-3 savings opportunities in your budget. You know it: you’re probably taking Uber/Lyft way too often when you could be taking public transportation, or maybe you’re eating out for lunch at work when you could seriously just bring your own food. I challenge you to find at least 2-3 excesses in your daily routine that you can cut back on to save for the rest of the year. For example, let’s say eating out to lunch every day costs on average $10. If you decide to scale back and instead save that money, over the course of this year you’d save $1,800 this year ($10 x 5 days a week x 4 weeks in a month x 9 more months this year)!
- Increase your 401(k) contribution rate by at least 1-2%. Let’s say your employer offers you a dollar-for-dollar match on up to 5% of eligible pay. So to get the company match, you contribute at least 5%. That’s a 100% return on your investment already. But can you increase your contribution rate by just 1%? Or even 2%? Those extra increases in savings today when you are young will yield you so much more in the next 30-40 years because of the power of compounding. Can you take the challenge and increase your 401(k) contribution at least 1-2%?
- Pay down even more of your debt. Aren’t paying your credit card bill in full? Or even making minimum payments? Or maybe you’ve deferred your student loan payments? Starting now, make sure you are actively paying off more of your student debt, a mortgage, a car loan, as well as any credit card debt you may have. Challenge yourself to get on a debt repayment plan ASAP, and make sure to limit your exposure to debt going forward so that you can build your net worth and achieve financial freedom.
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From Millennial to Millionaire: DIY 401(k) – 5 Do-It-Yourself Steps for the Digital Generation to Design and Manage their 401(k) on Amazon.