6-Week Financial Plan for a Better Budget

Whether your goal is to get out of debt, save for retirement or just stay on top of bills, it takes planning to manage your finances well. Get ahead of the game with this budget overhaul that will help you save more of your hard-earned cash. 

Week 1: Complete a self-assessment.

To kick off your six-week financial makeover, take a look at your current situation. Use a spreadsheet, if possible—and figure out exactly how much money you have coming in. “Include your after-tax salary, income from self-employment and any royalties, alimony or child support,” explains financial organizer Debbie Stanley, author of Organize Your Personal Finances … in No Time.

Next, write down your fixed monthly obligations: rent or mortgage, automobile payment, utilities and so on. Then review the past six months of credit-card statements to identify your spending patterns. (If you use a lot of cash, you should also jot down exactly where those dollars go.)

Online tools can make this process easier. Look for free, easy-to-use websites or apps that help you start tracking your money immediately.

Finally, check your credit report to finish your assessment.  

Week 2: Plan ahead.

Spend some time this week considering where you’d like to be financially five years from now. Would you rather have more emergency savings or a new house? If you have a partner, be sure to discuss your plans together. Certified financial planner Jill Gianola suggests that couples prepare for this discussion by each making a list of their own top-three money goals and top-three money worries. Don’t worry if you’re not on the same page. Just sharing your goals can help change the way you make financial decisions together.

Pick the top “worry” item on your list, and think of one concrete thing you can do to address it. 

Week 3: Brainstorm savings strategies.

Ideally, you should be putting away money for emergencies, retirement and—if you’re a parent—your kids’ college education. In the long term, you want to make sure you’re growing all of these accounts. For now, though, focus on that emergency fund. The traditional rule of thumb has been to have enough savings to cover at least three to six months of your basic bills. This week, figure out ways you can add $1,000 to that fund as quickly as possible. Cut down on spending for a few months, scale back vacation plans or have a mega garage sale.

Week 4: Consolidate and streamline.

Focus on simplifying your workplace retirement plans. First, look at where you’re putting your retirement money: are you spreading your contribution across a half dozen different mutual funds within your plan? The way you allocate retirement assets depends on many factors—but for most young families, one target-date retirement fund is usually sufficient. These plans are great because they’re keyed to the year you expect to retire. They include appropriate diversified mutual funds for your time frame and automatically become more conservative as you approach retirement.

Consider investing in a single no-load (no sales commission) mutual fund. Advisers can help you set up a single holding account for your retirement money, contact your old plans and assist with transferring funds. Whenever you leave a job, you can roll over your retirement-plan money to this single account.

Week 5: Cut back on credit cards.

A wallet full of plastic means more payments to keep track of and a greater possibility of running up big account balances. So this week, pick just two joint cards you will use regularly. Start paying off the balances on your extra cards and stop carrying them, but don’t actually close the accounts. Doing so can lower your credit score, according to Erica Sandberg, author of Expecting Money: The Essential Financial Plan for New and Growing Families. “The two cards you choose should be widely accepted, should not charge an annual fee and ideally should offer you some rewards, such as frequent-flyer miles,” says Sandberg.

Week 6: Streamline household bill paying.

You may already be paying your bills online, but if you’re doing so by going to the websites of your phone company, cable service, credit-card firm and so on, you can simplify things even further by completing all electronic payments through your bank or credit union.

Set up your fixed-amount bills to be paid automatically on the same day each month. Also, mark two bill-paying dates on your calendar: The fifth of every month for bills due on the 15th, and the 20th for bills due on the first. This is when you’ll complete online bill-pay for any that aren’t on autopilot. If you have a stray credit-card bill or two that doesn’t fit neatly into the twice-monthly routine, call the company and ask if they can adjust their billing to work on this schedule; many companies are happy to do so.