90-Day Plan to Reset Your Finances

Introduction

• Common struggle with money is not due to poor math skills but lack of a plan.
• Aim: Provide a 90-day step-by-step plan to reset finances and jumpstart financial journey.
• Key topics: Investing, money prioritization post-pay, saving on major life expenses.

Week 1: Review Current Financial Status

• Objective: Understand current financial situation by assessing income and expenses.
• Action Steps:
  • Pull up last 3 months of financial statements (bank accounts, credit cards, debt payments).
  • Categorize expenses:
    1. Fixed Expenses: Rent, utilities, car payments, subscriptions, groceries.
    2. Discretionary Expenses: Wants like dining out, travel, shopping.
    3. Debt Payments: Student loans, credit cards.
  • Log and categorize expenses in a spreadsheet.
  • Determine average monthly spend per category and savings rate (net profit).
• Outcome: Gain insights into spending habits to prepare for Week 2.

Week 2: Cut Unnecessary Expenses

• Objective: Identify and reduce unnecessary spending.
• Action Steps:
  • Sort expenses from largest to smallest.
  • Analyze each category for potential savings (target 10-30% reduction in 90 days).
  • Example: Reduce Uber expenses by using public transport.
  • Consider insurance rate comparison to save on car insurance.
  • Cancel unused subscriptions and limit shopping/eating out.
• Outcome: $400 monthly savings could result in $4,800 annual savings.

Week 3: Automate Savings

• Objective: Implement automated financial management.
• Action Steps:
  • Open a high-yield savings account (current rates around 3.8-4%).
  • Set up automatic transfers for savings and investments (suggested 10% split).
• Outcome: Reduce spending temptation by automating savings.

Week 4: Manage Consumer Debt

• Objective: Develop a plan for paying off high-interest debt.
• Action Steps:
  • Use credit card calculator to assess impact of increased payments.
  • Set up automatic debt payments.
  • Negotiate for lower interest rates with credit card companies.
• Outcome: Save on interest payments, reduce payoff timelines.

Week 5: Build Emergency Fund

• Objective: Establish a $1,000 emergency fund.
• Action Steps:
  • Use side hustles or sell unused items for additional cash.
  • Direct savings from expense reductions into the emergency fund.
  • Store emergency fund in a high-yield savings account.
• Outcome: Psychological win and peace of mind.

Week 6: Start Investing

• Objective: Begin investing in appreciating assets.
• Action Steps:
  • Invest in S&P 500 via index funds or ETFs.
  • Open brokerage accounts and automate investment contributions.
• Outcome: Capitalize on historical average returns of 8-10%.

Week 7: Increase Income

• Objective: Explore opportunities to raise income.
• Action Steps:
  • Ask for a raise if due.
  • Consider side hustles or learn high-income skills.
• Outcome: Focus on income growth alongside cost-cutting.

Week 8: Define Savings Goals

• Objective: Set and plan financial savings objectives.
• Action Steps:
  • Write down specific savings goals and calculate monthly savings needed.
  • Share goals to increase accountability.
• Outcome: Improved likelihood of achieving financial goals.

Week 9: Evaluate Credit Card Use

• Objective: Assess and optimize credit card usage.
• Action Steps:
  • Use credit cards responsibly to benefit from rewards.
  • Avoid if self-control is an issue to prevent accruing high interest debt.
• Outcome: Build credit and qualify for better financial opportunities.

Week 10: Track Net Worth

• Objective: Begin monitoring personal net worth.
• Action Steps:
  • Calculate net worth by subtracting liabilities from assets.
  • Regularly update and track net worth progression.
• Outcome: Visualize financial growth and progress over time.

Week 11: Review Spending

• Objective: Analyze financial progress from previous weeks.
• Action Steps:
  • Reassess spending patterns and categorize recent expenses.
  • Compare current spending to initial assessment.
• Outcome: Identify and correct any financial leaks.

Week 12: Set Long-term Financial Goals

• Objective: Plan ambitious long-term financial objectives.
• Action Steps:
  • Define 1-year, 5-year, and 10-year financial goals.
  • Break down goals into actionable steps and schedule regular progress checks.
• Outcome: Strategic roadmap for achieving significant financial milestones.

Conclusion

• Completing the 90-day plan sets the foundation for a well-managed financial future.
• Emphasize consistency, discipline, and long-term vision for wealth building.