April is ‘Financial Literacy Month’ and The IFW wants YOUR Financial Life to be in its best shape ever!
In honor of Financial Literacy Month, the IFW has launched its first-ever 21 Day Challenge. Each day IFW will post one new financial challenge.
Perhaps, you will look at the challenge and say “already have that done” – well, great. Or perhaps you will look at it and realize, you “need to get that done”.
Either way, make sure you have that challenge of the day accomplished. Then by day 21, you will officially have your financial life in its best shape ever!
Let’s Get the Challenges Started:
DAY 1: Take a quick inventory of your personal financial situation. Make sure you are clear on your income, expenses, assets, liabilities, net worth (your assets – liabilities), and your credit score. Get it down on paper and know it. Watch today’s video and take action!
DAY 2: Today is all about taking a detailed dive into the amount and source of all of your income. Write down all the income you earn each month. Include earned and passive income so you have clarity and confidence in what your total income is. Watch today’s video and take action!
DAY 3: is all about gaining clarity and confidence of your monthly expenses. Now that you know what is coming into your household each month it is crucial to know what expenses your household is responsible for. Being able to view expenses against income is critical! Watch today’s video and take action!
DAY 4: Taxes are one of our biggest expenses! Let’s get familiar with the difference between marginal tax rates and effective tax rates and get a sense of what you will have to pay each year. It’s important to take advantage of all the tax deductions and credits you are entitled to. Watch today’s video and take action!
DAY 5: Today is all about knowing your credit score! This is so important because it plays a very important role in your ability to finance things (like a home) that can grow significantly with funding from other entities, like a bank. If you haven’t signed up I strongly recommend you get the credit karma app and monitor your credit often. Your credit score is critically important in your financial wellness! Watch today’s video and take action!
DAY 6: Today is fun! All about writing down the assets you have accumulated thus far in your life. Be certain when you take “stock” of your assets you identify whether they are pre-tax or post-tax. For example are they assets that have been taxed and invested or not been taxed yet like a traditional IRA or 401(k). Enjoy!
DAY 7: Today is all about liabilities! Liabilities are not necessarily a bad thing as long as they are the right liabilities. As an example, high-interest credit card debt is a bad liability. however, a low-interest mortgage is a good liability as it is tax-deductible and enables you to purchase an appreciating asset. Go ahead and write down all of your liabilities so you can make sure you are not too leveraged with bad debts. Watch today’s video and take action!
DAY 8: Every day you make a financial decision that has an impact on your net worth! Each action you take every day either positively affects or negatively affects your net worth. We want you to review all the assets you wrote down and subtract all your liabilities so you determine your current net worth. Going forward think through each decision you make and make sure you categorize your needs vs your wants! Watch today’s video and take action!
DAY 9: Risk management is a very important part of a proper financial plan. While we hate to think about what can go wrong, it is important to address these situations and protect ourselves from premature death, a sudden Accident or illness, needing long term care and other types of liability insurance. The Certified Financial Planning Board curriculum dictates risk management strategies be addresses before wealth accumulation goals. Watch today’s video and take action!
DAY 10: Life insurance is an important part of an overall financial plan. It can serve as protection for your family and it can also serve to act as a safe part of an overall investment portfolio. There are lots of good uses of life insurance so be sure to gather all your policies and review them!
DAY 11: Disability insurance is a very important part of a financial plan because it protects your income. Imagine you were sick or hurt and could not work. Your bills don’t stop if you are unable to work! Disability Insurance is definitely something to consider reviewing.
DAY 12: Today is all about Long Term Care Insurance! This type of insurance is critical to protect your assets in case you need long term care. A lot of people believe Medicare takes care of this but it’s not the case. If you have LTC insurance definitely review it with a professional and if your over 50 you may want to begin considering the purchase of this kind of insurance.
DAY 13: Having your property insurance, and automobile insurance reviewed to make sure you have the right limits AND that you are paying the right price is very important. While it’s not the most exciting thing to review it certainly can be important if something unforeseen occurs.
DAY 14: Today is all about having a proper emergency and opportunity fund. Generally speaking it is recommended you keep 6 months- 12 months of expenses in an emergency type fund where you can access cash quickly. This should give you peace of mind if an emergency arises and/or a unique opportunity to make an investment of some kind. Watch today’s video and take action!
DAY 15: Now that you have an emergency reserve created it’s time to start planning for goals 3-10 years out. Perhaps it’s a home, a vacation home or a business. This time frame requires your assets be positioned for the appropriate time horizon. Watch today’s video and take action!
DAY 16: Today is all about getting clarity on your long term retirement planning goals. When do you want to retire? How much money do you need each month? How long do you need to make sure your income is available? Create clear goals and objectives and make sure you have a solid plan to get there.
DAY 17: One of the most beneficial ways to save for retirement is the potential 100% rate of return you receive from your companies 401(k) match. Make sure you are aware of how much you have to contribute to get the full match available. This is a great tool to help you accumulate a lot of money for retirement!!!
DAY 18: Today is all about learning the mainstream investment programs available to most anyone. Mutual funds, both actively and passively managed, are a great way for individuals to get exposure to a diverse portfolio. ETFs work similarly (main difference is they trade throughout the day as opposed to just once a day). Finally, for a little more customization you can hire a professional money manager to build you a portfolio tailored to your specific situation. They are all good investment programs, but have to be based on one’s unique circumstances.
DAY 19: Have you checked to make sure your social security credits are accurate? Simply go to sea.gov and verify what you can expect from Social Security and make sure your earnings history is accurate as you only have three years to correct this from the date of an error.
DAY 20: Today is all about setting up three specific accounts. One for short term goals of 0-3 years, one for mid term goals of 3-10 years, and lastly long term goals for 10+ years. It really organizes your finances so you can achieve all your goals and “get there”
DAY 21: We’ve covered a lot over the past 21 days and now it’s time for our last bit of guidance. The only constant in life is change so it’s important to review where you are each quarter and make sure you are on track for all of your goals and objectives.
We hope you learned a lot and have the information and education to live your best life.
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