The 30 Day Challenge – How To Turn Around Your Finances

Posted on 13/02/2017 by | 0 comments

The 30 Day Challenge To Turn Around Your Finances

Do you want to:

  • Become debt free
  • Buy a house
  • Pay off your mortgage
  • Take a break from work to travel, work on a volunteer project or learn a new skill
  • Afford your dream wedding

All this and more can be achieved with the Money Saving Challenge – a simple 30 day program for turning around your finances and re-structuring your life – enabling you to afford the things you really want.

Perhaps you thought you would never become debt-free or that owning your own home would always be a distant dream?

The aim of this challenge is to provide you with 30 straightforward steps towards re-structuring and streamlining your life, so that you can achieve your dreams and ambitions.

Start The Challenge Today

If you are feeling properly motivated to be able to afford the things you really want, you won’t want to waste any time – so let’s get started.

Day 1 – Set a Single Goal

Decide what you want to achieve.  Maybe you badly want to get out of debt, perhaps you are renting and want to save a deposit for a house, you may even be bored of work and want to take a few months off to travel or you have a burning desire to start you own business.

Each of these wants and needs can be defined as goals, but trying to achieve all of your goals at once is impossible, so instead prioritise what is most important to you and focus on achieving one single goal at a time.

The goal you choose will be the focus for your first Money Saving Challenge.

To help put this into perspective, I want to buy a larger home.  There are other things that I want to do, but for the time being my focus is saving to afford the place we really want.

Knowing that there is a reward for all our hard work and saving, gives us the motivation to make the shorter-term sacrifices.

Without a tangible goal or any clear knowledge of what you want to achieve, it becomes very difficult to motivate yourself to save

Day 2 – Create a Budget

With your goal defined you’ll know where you want to go, but without a budget you won’t know where you currently are (financially speaking) or be able to track your progress to your goal.

Budgets enable you to do a bunch of other useful things too, such as:

  • Understand what you earn each month
  • Clearly see what you spend each month
  • Determine whether your monthly spend is greater than what you earn, and if so, by how much
  • Calculate your total savings and your total debts
  • Identify ways to cut back on your essential and non-essential spending

Day 3 – Create a High Level Plan

Hopefully you have set yourself an ambitious goal for the challenge.  If it is ambitious, then it will probably take some time and effort to achieve.

Breaking big challenges down into smaller chunks helps to make them much more achievable and setting dates or milestones for when those chunks need to be completed, provides a plan to work towards.

If the goal is to buy a house, the milestones may look something like this:

  • Save 20% deposit (as this is such a large part of the process, you could break it down into sub-milestones by value – e.g. save £5,000, save £10,000, save £15,000, save £20,000, etc)
  • Save 3% stamp duty
  • Save 2% buying costs (solicitors and search fees, etc)
  • Search for property
  • Secure mortgage
  • Make an offer
  • Complete the sale
  • Move in

Try to keep the plan in a nice and simple format:

  • Milestone and date
  • Milestone and date
  • Milestone and date
  • etc

Anything more complicated, just becomes a pain in the backside to create and maintain.

Day 4 – Set Your First Monthly Savings Target

Use your budget to determine what you can realistically afford to put into savings each month and set this as your initial savings target.

Don’t be too disillusioned if you can’t afford to save much to begin with, as there are a number of financial tactics in this challenge to help boost your savings.

Day 5 – Begin Tracking Daily Spend

Most of the spending information required for your budget will come from your bank and credit card statements, but keeping a spending log for a couple of weeks will provide a useful insight into your small day-to-day spending and may reveal some excellent money saving opportunities.

Day 6 – Start Reducing Your Essential Costs

To boost your monthly savings target it is now time to get all business-like and begin slashing costs.

Use your budget to identify your essential monthly costs.  These will include mortgage repayments or rent, council tax, food shopping and commuting.

Starting with the most expensive monthly cost, look for ways to reduce it and then move onto the next highest cost to try and reduce that and so on.

Cutting your big costs will involve a bit of work and may take you out of your comfort zone, but the potential savings from reducing mortgage repayments or spending less on commuting will greatly out-perform the small, frugal savings that many people waste their time with.

Day 7 – Start Reducing Your Non-Essential Spending

Non-essential spending goes beyond rent, bills and groceries.  It covers hobbies, holidays and other fun stuff.  Technically you could live without it and save a lot more money, but life would pretty grim then!

Instead, try to achieve a balance between having fun and saving.

So if you are spending a large proportion of your money on clothes or socialising, try reducing the amount you spend by half for one month and find alternative, no-cost ways to have a good time.

Another good approach is to use the envelope budgeting technique.  Set yourself a monthly allowance for your fun money and just after pay-day withdraw one month’s allowance from your bank and keep it in an envelope.  As you spend you will see the tangible scarcity of your cash and will only want to spend it on the fun things you value the most.

Day 8 – Learn The Basics Of Wealth Creation

Start broadening your financial knowledge by reading The Wealth Creation Pyramid.

Day 9 – Cancel Unused or Unnecessary Monthly Subscriptions

Paying monthly subscriptions for different services, such as Sky, Love Film, mobile phone contracts and the gym can eat up a large proportion of your available cash.

Often they can be easily substituted by much cheaper alternatives, for example:

  • Sky = Freeview
  • Love Film = the local library
  • Mobile phone contracts = pay-as-you-go phones
  • Gym = running or cycling

Unless you honestly believe you are making the most of the service you are paying for, cancel it and instead put the money towards your savings goal.

Day 10 – Gather Together Your Online Money Saving Tools

Bookmark a selection of comparison, cashback and voucher code websites into your web browser.  Then use the sites as part of your search for better deals on utilities, insurance, travel and shopping.

Day 11 – Find Out What Financial Freedom Is

Take another break to improve your financial knowledge.  This time read The Rules of Financial Freedom.

Day 12 – Progress Review

We are nearly half-way through the challenge, so it is probably a good point to stop and review progress so far.

By this point you should have:

  • set a goal
  • created a budget
  • produced a high level plan
  • set a monthly savings target
  • started collecting information on your daily spending habits
  • started to reduce your essential costs
  • started to reduce your non-essential costs
  • cancelled any unnecessary subscription services
  • learnt the basics of wealth creation
  • gathered a collection of online money saving tools
  • found out about financial freedom

Make a note of the savings that you have been able to make so far from the money saving ideas you have implemented and from the subscription services you have stopped.

Remember regular progress checks are a great way to ensure you stay on track to meet your goal, so get into the habit of regularly checking your bank balance and updating your budget.

Day 13 – Sort Out Your Paperwork

Buy yourself a simple lever arch folder and a packet of ‘polly pocket’ plastic sleeves.  Then gather together all your financial documentation from under the bed, behind the sofa, in the kitchen drawer and everywhere else that paperwork gets left for want of a better place.

Sort your paperwork into two piles:

  • One pile for keeping
  • One pile for documents that you don’t need

Then simply start putting the pile for keeping into the plastic sleeves in your lever arch folder.  Shred anything in the other pile that has confidential information on it.

Then put your folder in a safe place, ready to access next time you need to look at your car insurance, mortgage details, P45, etc.

Day 14 – Review Your Insurance Coverage and Warranty Policies

With your freshly sorted folder of paperwork, review your insurance coverage to ensure you have adequate cover to match your lifestyle.  You may want to consult with an independent financial advisor to run through the options and pro’s & con’s with you.

Next, if you previously took out some sort of gadget insurance for something like a new phone, consider whether you still need it.  If not, cancel it and save the £7 or so quid a month instead.

The same goes for extended warranties on electrical goods around the home.  Do you really need five years extended warranty on a £90 hoover?  All of these small insurance and warranty policies start to add up, so try to streamline what you can.

Day 15 – Get a Dose Of Saving Inspiration

Read the blog post How We Paid Cash for Our First Home.

Day 16 – Create a ‘Get Out Of Debt’ Plan

Getting out of debt may actually be the goal you are trying to achieve in this challenge or it could be one of the steps you need to take to reach your goal.

People often talk about good debt and bad debt.

Good debt being money borrowed to buy something that will either retain or grow in value – for most people this will be a property.

Bad debt is money borrowed to buy things that will lose their value – such as cars or televisions.

Your own personal circumstances and goals will determine whether you want to pay off your mortgage as soon as possible or focus on other financial priorities  – there are pro’s and con’s to both choices.

However paying off all other debts (such as credit cards, car loans and overdrafts) should be a major priority – simply because the interest charged on debts heavily outweighs the interest that can be earned on savings.

If you don’t have any debts (excluding your mortgage), simply jump to the next step in the challenge.

Day 17 – Open a Savings Account

If you don’t already have one, open up a savings account or a tax-free savings ISA and use this to store all the money that you save from streamlining your spending.

Keeping your savings in a separate account from your day-to-day current account, makes it easier to manage your money and reduces the temptation to spend.

If your goal is to clear your debts, then skip this step for the time being and simply focus on putting as much money into your monthly repayments as possible.

Day 18 – Automate Your Saving

Once the savings account is set-up, create a standing order to automatically move the sum of your monthly savings target from your current account to your savings account just after pay-day each month.

Day 19 – Review Current Savings and Investments

If you already have savings and investments, check that you are getting the best value in terms of fees, returns and tax efficiency.

Often new financial products come onto the market with better deals to entice customers from their existing savings accounts and ISAs, so you could be missing out on an opportunity to make your money work harder for you.

Day 20 – Ask For a Pay Rise

Slashing costs to create more money for your savings goals will only take you so far.  So if you want to really boost your savings, you will need to start earning more money.

Asking for a pay rise is the first step towards increasing your income, but before you ask read this blog post: How to Convince Your Boss that Giving You a Pay Rise is an Absolute No-Brainer!

And if your boss says no, then it might be time to start looking for another job.

Day 21 – Discover The Skills Employers Are Looking For

Have you got the high demand skills that employers are looking for?  The ability to demonstrate the right skills to employers will have a direct impact on your salary.

Day 22 – Investigate Ways of Earning a Second Income

Another way to boost your income and provide yourself with some protection from redundancy is to start a part time business.

Day 23 – Get a Dose Of Earning Inspiration

Read this article by Paul Graham on how to create wealth.

Day 24 – Progress Review

As we approach the last few days of the challenge, it is worth having a final progress check.

By this point you should have:

  • set a goal
  • created a budget
  • produced a high level plan
  • set a monthly savings target
  • started collecting information on your daily spending habits
  • started to reduce your essential costs
  • started to reduce your non-essential costs
  • cancelled any unnecessary subscription services
  • learnt the basics of wealth creation
  • gathered a collection of online money saving tools
  • found out about financial freedom
  • sorted out your paperwork
  • reviewed your insurance coverage and cancelled any unnecessary policies
  • got a dose of saving inspiration
  • created a ‘get-out-of-debt’ plan (if relevant)
  • opened a savings account (if relevant)
  • automated your savings (if relevant)
  • optimised and savings or investments your currently own
  • asked for a pay rise
  • discovered the skills that employers are looking for
  • investigated ways of earning a second income
  • got a dose of earning inspiration

Update your notes on the savings made from your money saving ideas and any subscription services, insurance policies or warranties that you have cancelled.  Modify your monthly savings target to reflect these changes.

Day 25 – Have a Good Ol’ Clear Out

Less is more as they say and whilst the amount of stuff you have in your home is not directly related to your finances, a clear out will give you more space, make you feel better about yourself and could even earn you some money on ebay or at the local car boot sale.

Once you have had your clear out, you could even introduce a ‘one in, one out’ rule to keep a tab on impulse buying.  For example, you can only buy a new coat, if you get rid of an old one.

Day 26 – Create a Visual Reminder Of Your Goal

If your goal is ambitious, it is likely to take a while to reach it.  So it is important to keep yourself motivated in the long-run.

One way of doing this is to produce a visual reminder – maybe a scrap book containing pictures of particular homes and furnishings that you like, or a collection of pictures to depict how your wedding should be.

Alternatively it could be a ‘debt-free barometer’ that you stick to your fridge and update as you pay off your debts and get closer to your goal.

Day 27 – Find Out About Long-Term Saving

As it is the last knowledge day of the Challenge, there are articles in our blog to read about saving for the long-term.

Day 28 – Stop Worrying About Perfection

It is always better to start something and only get it 80% right, rather than failing to start at all for fear of getting it all wrong.

Take opening a savings account.  Yes you can scour the market looking for the best rate of return and weighing up all the other buying factors, but this is time consuming and most people have got better things to do with their lives.

So have a look around a few option, but then just pick what looks like the best and start saving into it.

There it is done – you now have a savings account set up, which you can always change in the future if a better deal comes along.

Perfection prevents productivity and getting things done.  Instead, create your system and then continuously improve on it.

Day 29 – Make a List Of All Your Other Goals

This challenge focuses on saving towards one goal at a time.  At some point you will achieve that goal and need to know what to work towards next.

People tend to have lots of goals, both short and long-term and it is good to get them written down, so that you can begin planning when to meet them.

This does not need to be a big strategic exercise, just some estimates (nothing perfect!).  Some of my goals are 30 years away and are just one or two words, but it is nice to have them written down.

Day 30 – Subscribe To Our Blog To Get Coupons And Other Money Saving Tips

So make sure you get all the latest updates.

30 Days Closer To Hitting Your Life Changing Goals

The excellent work you have done over the last 30 days will set you in good stead towards achieving your life changing goals.

With streamlined spending, automated saving, increased earnings and a ruthless focus on achieving your goal, you could be buying that house, boarding that plane or walking up that aisle sooner than you think!

Remember to keep on working through your budget to find money saving ideas, keep regular progress checks and keep out of debt.

Here’s to your financial freedom!

 

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