30-Day Financial Cleanse

Week 1—Set the stage

If this were a food cleanse, you'd start by cleaning out the refrigerator. To start your financial cleanse, temporarily put away your credit cards (don't worry, you'll get them back at the end of the month) and use cash for your day-to-day expenses. You'll also keep a written record of where your money goes.

Starting on Sunday of Week 1:

• Look at your calendar and think about your day-to-day expenses for the week: Things like lunches out, hair appointments, morning coffee, outings with your kids, date nights and impulse purchases. Put away your credit cards and go to the ATM to get enough cash to cover those expenses. This is your pocket money for the week.
   
• Create a tracking system for your cash, whether that's a notebook, an app, a spreadsheet, or our spending tracker worksheet.
   
• Pick one area where you can cut back, and commit to it. For example, you may not need to go out to lunch every day. Or maybe you can use public transportation instead of using a ridesharing service or taxi. Can you save $10-$20 here or there? It all begins to quickly add up.

Throughout the week, stick to your cash diet as much as possible. If you absolutely have to use a credit/debit card or e-pay system, add the amount to your tracking system.

Week 2—Track and categorize ALL your spending

In Week 1 you were only focusing on your out-of-pocket spending. Now you need to see where all your money goes. When was the last time you added up all your monthly bills? Well now's the time!

Starting on Sunday of Week 2:

• Begin to track your essentials as well as your discretionary expenses. If you have a stack of bills, go through them. If you have most of your bills on auto-pay, check recent statements. From mortgage or rent to utilities to insurance premiums to subscriptions and club memberships, add up all your monthly expenses.
   
• Make a budget, by category, separating out your essentials from your nice-to-haves. This should include your personal everyday expenses plus things like household expenses, car maintenance, tuition, student loan payments, pets, medical costs—EVERYTHING you spend money on in the course of a month. And don't forget to prorate expenses that only come up once or twice a year, such as property taxes or insurance premiums.
   
• Compare your total monthly spending to your monthly income. Are you in the black or the red?

Throughout the week, keep your budget in mind. When you're tempted to go beyond it for a particular purchase, ask yourself if it's worth blowing your budget—and how you'll pay for it.

Need help creating a budget? Try this: http://www.schwabmoneywise.com/tools-resources/monthly-budget-planner

Week 3—Articulate your goals

By the end of Week 2, you should have a better idea of where your money is going. Now think about where you'd like it to go. Don't be afraid to dream a little, but also be realistic. You want your goals to be things you can actually attain.

Starting on Sunday of Week 3:

• Establish one primary short-term goal, something you'd like to achieve within a year. This could be as broad as setting up an emergency cash cushion or as specific as saving for a vacation.
   
• Establish one primary medium-term goal that you'd like to realize within three to five years. The down payment on a house? Seed money for a new business?
   
• Establish one primary long-term goal, one that's pretty far in the future. Retirement might be right up there, or a child's college education.
   
• Assign a dollar amount to each goal.

Throughout the week, as you continue to spend mindfully, think about where you might be able to cut back in order to direct more money toward these goals.

Need help figuring out what it will take to reach your goals? Try this: http://www.schwabmoneywise.com/public/moneywise/tools_resources/savings_calculator

Week 4—Put it together and keep it going

Congratulations! You're three weeks in and should have a much greater awareness of how you're spending your money. So now it's time for a little soul searching as well as some practical accounting.

Starting on Sunday of Week 4:

• Review what you've learned about your money habits. Are you happy with the way you spend? Does it reflect your priorities? Are you getting the best value? What changes do you need to make to save more to meet your goals?
   
• Take a longer-term view and project your budget and income out for an entire year, making sure you include savings. If you're in the red, cut back in other places.
   
• Make a personal commitment to check in with your actual spending at least once a month for the next year.
   
• For extra credit, use cash instead of credit whenever possible so you continue practicing mindful spending.

Throughout the week, keep up your good habits. Tell your buddy what you've learned. Share your personal ah-ha moments with us at @CarrieSchwab and Carrie Schwab-Pomerantz's LinkedIn page using the #FinancialCleanse hashtag. Let's build a community!

Need help prioritizing your savings? Try this: Go to www.schwabsavingfundamentals.com for suggestions on what to save for first.