Are you aware of how many accounts you have? Do you know how much is in each account? Do you know how much you spend on a monthly basis? How much do you earn on a monthly basis?
Hive Challenges are intended to help you take the baby steps you need to start becoming financially literate. Perhaps one of your 2018 New Years resolutions is to be more financially responsible. These challenges will help you organize your finances in an easy-to-grasp and logical manner.
Perhaps you are a tactile learner, you learn through action. I can write a hundred posts on how to do things, but sometimes you need an assigned task to comprehend a concept. Hive Challenges will give you a task list to follow.
The goal of this month is awareness. You need to know where the starting line is before you can properly begin the journey to financial literacy. Figuring out where the starting line is can be a big part of the journey, especially if you have never considered your personal finances before. Looking at all that information can be exciting, scary, depressing, exhilarating, frustrating, and fun all at the same time.
Let me take this time to remind you, the fact that you are even considering this is awesome. Some people go their entire lives not understanding their own financial picture. The fact that you have the courage and drive to figure this out is something to be proud of.
Having said this, I want you to keep a few things in mind. Remember to stay positive no matter what your current finances look like. Stay humble if you happen to be in a really good place. And please, PLEASE, remember everyone’s financial picture is different. Everyone’s financial journey is so different, it’s like comparing the merits of an apple to a tennis ball. It just does not work.
Hive Challenges are support zones. We lift each other up. We help each other build. If you have questions, ask. Help is here for you.
The reason most resolutions fail in the first couple of weeks is because people don’t know how to properly change a habit. For this first month, I will not be asking you to change your habits. As a matter of fact, I ask that you change nothing at all. Continue the spending habits you have. Continue earning as you usually do. I don’t want you to change anything.
What I want you to do is to start recording your spending. Now before you start protesting, saying that is a new habit, let me stop you right there. I am not asking you to start a money journal. Do not start recording every penny you spend like some people record every calorie they eat. I know this doesn’t work for a lot of people. If it does for you, great, but this is not a requirement.
I want you to spend like you usually do…and keep all your receipts. Every monetary transaction involves a piece of paper with some scratches detailing how much you spent. I want you to collect every single one of these mini contracts.
HOW TO KEEP A RECORD
When you get physical receipts, shove them in your wallets, pockets, or in between the pages of your planner. Start collecting them in one singular place, whether that be a folder labelled January, a haphazard pile, a shoe box, a paper clip, I do not care. Just keep them. I do not care if they are crumpled or ripped. As long as you can see how much you spent, and you have an idea of what you spent that money on.
When you get digital receipts, do not delete them. Print them off and add them to your pile of physical receipts. Save them in a folder in your email. Save PDFs on your computer. Scribble something on a scrap of paper, and add that scrap to your pile of physical receipts.
Utility bills, mortgage statements, services, and any and all subscriptions are fair game. Add them to the pile. If you spent money, I want you to have a record of that spending somewhere.
If you use credit cards, you can use the statements at the end of the month as your tracking method. This is NOT a recommendation or an excuse to get a credit card. Credit cards are a big responsibility. If you can make the payment at the end of the month, great, use a credit card. If not, stick to cash, debit cards, or whatever method you have been using thus far.
Calling all type A personalities. If you love recording things, then by all means, please start a spending journal where you record every penny. Start sorting them into categories if you feel like it. Type B personalities, know that I am not requiring organization at this point. Random piles are appreciated and encouraged.
BECOME A DETECTIVE
The next part of the challenge requires some detective work on your part. Collecting receipts is something I want you to do for the whole month of January. You need to establish your spending to move onto the next steps of the challenge. However, you also need another component of your finances: your current accounts.
You need to find every single account under your name, and figure out how much money you have in said accounts. This includes checking accounts, savings accounts, high yield savings accounts, bonds, stocks, money market accounts, retirement accounts, IRAs, 401ks, brokerage accounts, etc. If you have an account you opened 10 years ago, saved 10 bucks in it and never closed it, record it.
This exploration also includes all your loan accounts. If you have a car loan, figure out how much you still owe. For mortgages, figure out how much you still owe. Student loans, same thing. If you have credit card debt, you’ll need to figure that out as well. In addition to how much you owe for all these loans, I also want you to figure out the interest rate.
Scribble all this information onto a sheet of paper and add it to your January pile. Or, get fancy and start a spreadsheet. Just make sure you have a record of how much you have and owe.
RECORDING YOUR INCOME
In addition to your spending and account balances, you will also need to know your income. For traditional employment, this is best done by looking at your paycheck.
If you have never looked at one of your paychecks, now is the time. Most employers have an online system where you can view and/or download your paycheck stubs. Your accounting department would probably be happy to help you if you need guidance.
You will need any paychecks you get in January. If you are paid bi-weekly, once every two weeks, you will probably have two paychecks this month. Save the PDFs on your computer. Print them off and add them to your pile. Or just know how to access them for future reference.
These challenges will focus on those with traditional employment. I wish I could cover every form of payment for non-traditional employment, but then these posts would turn into novels. If you are employed through other methods, I encourage you to develop your own system for recording your income. For example, if you are a freelancer, you probably provide your clients with a receipt for your services. Save these mini contracts as a record of your income for future use.
JANUARY 2018 SUMMARY
In summary, you will need to do the following three tasks this month:
- Record ALL your spending in the month of January by collecting all receipts/mini contracts.
- Figure out your income. Make sure you have a record of everything you earned in January by the end of January.
- Become a detective, and find all of your accounts. Record how much you have in each account. For loans and debt, figure out how much you owe and the interest rate. Make sure you have a record by the end of January.
What do you think of this first challenge? Do you think this will make you more aware of your general finances? Are you confident you will have everything you need by the end of January? Let me know in the comments!