Improve Your Finances with a Personal Money Day Checklist

Money Girl explains how to use a Personal Money Day checklist to save--and even make--more money.

Laura Adams, MBA
7-minute read
Episode #363

Task #1: Create a Personal Financial Statement

Your Personal Financial Statement (PFS) is a tool that gives you a bird's eye view of your current financial situation. I recommend that you create a PFS, and update it every year for a periodic reality check. 

The purpose of a PFS is to calculate or recalculate your net worth, which tells you a great deal about your overall financial health. 

What's net worth? It's a simple formula: net worth = assets - liabilities.

Assets are what you own, like a home, car, or investments. Liabilities are what you owe, like a mortgage, car loan, or credit card debt. When you subtract your total liabilities from your total assets, you've calculated your net worth. It's really that simple. For instance, if you have $150,000 in assets and $125,000 in debts, your net worth is $25,000.

For more detail on creating a PFS, read chapter two of my book, Money Girl's Smart Moves to Grow Rich. You'll also find my quick and dirty formula to know what your net worth should be for your age.

Task #2: Set Financial Goals

After you get a clear picture of where your personal finances stand today, based on the PFS you've created, consider how you're doing. Maybe you don't have any retirement savings, or have a shockingly large amount of debt that's weighing you down.

An important part of your Money Day is to set some financial goals for you and your family. Think about how you'd like your financial life to look in 5, 10, or 20 years.

Here are a few suggestions for goals that could really improve your financial health:

  • Establish an emergency fund equal to 3 to 6 months of your living expenses
  • Participate in a retirement plan at work or open up an Individual Retirement Arrangement (IRA) on your own
  • Increase your retirement savings to 10% to 15% of your gross income. 
  • Pay down debt by tackling the most expensive or highest-interest balance first and then working down to less expensive debt.

Goals keep you on track because they give you something specific to work toward. Write them down so you can revisit your progress each year and make necessary adjustments. 

See also: 7 Days to Healthier Personal Finances

Task #3: Create a Spending Plan 

Now that you know where your finances are and where you'd like them to be in the future, it's time to close the gap between the two. The best way to do that is to really understand where your money goes.

If you don't already have a budget, or what I prefer to call a "spending plan," consider this: you can't change what you don't measure. If you have no idea how your income is being spent, you won't be able to manage your money effectively.

A spending plan is simply a plan for how you intend to manage your money. It makes sure you account for your financial goals, in addition to all your living expenses. Of course, the total of all your spending should never exceed your take-home pay, otherwise you're living beyond your means and could get into serious financial trouble.  

You can track your spending on paper using an Excel spreadsheet, a Google Doc, an online application such as Mint.com, or financial software like Quicken.

The goal of a spending plan isn't to make you miserable. Focusing on where you can free up money to accomplish what's truly important to you and your family should get you excited!

You can learn step-by-step how to create a spending plan that will really work in chapter two of my book, Money Girl's Smart Moves to Grow Rich.

See also: Smart Moves for Guaranteed Financial Success


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a trusted and frequent source for the national media. Her book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show. 

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