To ring in the New Year, CNBC Select is posting a new money challenge each day for the first week of 2021. Think of these tasks as your financial deep clean, based on expert advice, to help you align your money choices with what you care about most. These are simple tasks, but they do require a commitment. Are you in?
This is day seven of seven.
Congratulations! You’ve made it to the final day of our 2021 seven-day money challenge. Since day one, you’ve calculated your net worth, planned your budget, shored up your emergency savings, drew up an investing plan and took some time to think about how spend with impact in the new year.
The final step is to put some time on the calendar over the course of the year when you can review your finances and make sure you’re staying on track.
There are two words you’ll want to remember that will help make 2021 your year of accountability: “chunking” and “slicing.” These terms may sound like kitchen lingo, but Betterment managing director Dan Egan came up with them after years of behavioral research.
Here’s his advice.
Step One: Set aside ‘chunks’ of time
In order to make sure you’re keeping up with your finances, Egan recommends you set aside blocks of time (he calls them “chunks”) every month, and then commit to using that time for monitoring your money situation.
To make sure you actually stick to those money dates, Egan recommends pairing the task with something you love. Light some candles, cook dinner, grab your favorite chocolate or wine or even bake cookies.
It’s called “temptation bundling,” Egan tells CNBC Select. The point is to stop yourself from avoiding the tasks you hate by associating them with something fun.
“Make a party out of it. Get a bottle of wine and some chocolate…enjoy.”
Try to aim for your routine check-ins to take place at least once a month, biweekly or when you get your paychecks, based on works best for you.
Handle recurring tasks like checking your credit report for errors, balancing your deposit accounts (making sure your paychecks are deposited and you have enough to cover your bills/transactions), looking for flagged transactions that could signal identity fraud, etc. The point is to make sure that everything is running smoothly and your accounts show business as usual.
In addition to the routine money dates, also set aside at least two to four larger blocks of time throughout the year. Some say every six months, while others might find that quarterly (every three months) works best.
Tackle bigger tasks in your quarterly money dates, like the stuff we’re prone to putting off, or maybe the bigger-picture money stuff that requires more attention (and some phone calls). Do a deeper dive into your finances and review how things are going versus what you planned. This is also a good time to handle tasks like opening a new credit card, canceling a card, setting up a new bank account or rolling over an old 401(k).
Step Two: ‘Slice’ up your tasks
Once you’ve plugged all those dates into a calendar, the next step is to divvy up all the tasks you want to accomplish during each block of time. Egan calls this “slicing.”
Most tasks have smaller to-dos, like updating spreadsheets, linking or unlinking accounts, recovering passwords, etc. This is especially true when you’re merging retirement accounts, opening a new checking or savings account, signing up for an investment platform, opening a business checking account, researching and hiring a financial planner, taking out a personal loan, etc.
Make these tasks less intimidating by planning ahead so you’re not caught off guard when something you thought would take you five minutes takes an hour.
“Break them down into incremental tasks,” says Egan.
For instance, opening a new checking account may get “sliced” up into four smaller subtasks:
Task 1: Research new accounts and products (1 hour)
Task 2: Decide on one account and submit application (30 minutes)
Task 3: Transfer money to new account (30 minutes)
Task 4: Update your autopay, bill pay information for all subscriptions; update your paycheck direct deposit settings (1 hour)
Some people might prefer to knock these tasks out in one sitting, but Egan argues that you might be more likely to finish when you count each individual subtask as a win. Which brings us to the last step: celebrating.
The power of small steps
You can put aside $20 per week in order to save $1,000 in a year. Double that to $40 per week (or $160 per month), and you’ll save $2,000 before the ball drops in 2022.
Step Three: Celebrate your wins
Reviewing your finances and taking care of money-related tasks should make you feel good. After you’ve marked your money goals on the 2021 calendar and set accountability dates to track your progress and/or knock out tasks, plan low-cost ways to celebrate yourself when you hit your targets.
Berna Anat, a personal finance influencer who has over 36,000 followers on Instagram, celebrates her followers’ financial breakthroughs with weekly dance parties. Similarly, Stefanie O’Connell created Statement Cards to celebrate women’s career and financial successes.
Whether 2021 is the year you will max out your IRA, pay off your debt, buy a new house or negotiate that raise, trust that pairing discipline with pleasure will encourage you along the way. This will lead to better progress and habits (plus more fun!).
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.