A financial cleanse is like a detox diet for your bank account. It won’t make it smaller — which is the aim of most diets — but it will help eliminate fatty subscriptions and toxic spending habits that your finances could do without. The idea is to make it easier to save more, pay off debt faster, achieve your financial goals, and possibly improve your mental health.

Even if your finances are in good shape, it never hurts to analyze your spending habits. Just as we often avoid going on a diet until our pants don’t fit, we tend to ignore bad financial habits until they become bigger problems.

How to Start

The online world has an abundance of information about financial cleanses and an equal number of people trying to sell you programs for them. You could subscribe to one of them and maybe avoid some of the legwork involved, but wouldn’t that potentially be another expense you probably don’t need?

Ideally you want to start small. We are going to list a few different “cleanse” options. A smart strategy, advise experts, is to pick just one for a month or so — to give yourself time to build new healthier habits and routines — before embarking on another. Doing them all at once will be like going on a crazy crash diet, which always leaves you feeling depleted and ready to binge.

Option 1: Track Every Penny

The first step to financial cleanse is to track every penny-piggy bank imageIf you’re unsure where your bad habits are hiding, start by tracking every penny. This can feel difficult if you’re not in the habit of doing so, but online and mobile banking apps make this so much easier. Most banks offer these for free when you have an account, so make sure you’re taking advantage of them and linking your home computer and phone, if possible.

The second part of this cleanse is to go over your transactions. Once you’ve gathered enough data to represent your typical spending habits, look over the list. Thoroughly. Most banking and budgeting apps offer the ability to categorize your spending, so go ahead and take advantage of that. If not, sort through your transactions and put them into your own categories, such as groceries, mortgage, bills, or entertainment.

Organizing your transactions this way allows you to see where you spend the most money and which costs are necessary. Sometimes, simply being aware of where your money goes is all it takes to get back on track.

Option 2: Cut Out Unnecessary Costs

two hands hold index cards with "unsubscribe" and "subscribe" written on them, as if deciding between themOnce you’ve gotten into the habit of tracking your expenses, it will be much easier to analyze where you can start reducing unnecessary expenditures. 

For most Americans, the first place to look is subscriptions. So many of us subscribe to one thing or another and then forget to use that service regularly enough to justify it. One friend realized she’s been paying for Kindle Unlimited through Amazon for a whole year and had only downloaded one free book. That is a huge waste of money and an easy one to overlook. You can save a few dollars every month by cutting out unnecessary monthly subscriptions to movie streaming services, apps, and add-ons for sites such as Amazon. 

It’s also a good idea to look at your entertainment category for frivolous spending habits. It’s not terrible to enjoy Starbucks every now and then, but if you’re stopping in for a coffee every time you run errands? That’s a habit, and it adds up. The same goes for eating at restaurants and getting take-out; you can save a ton of money by meal planning for each week and limiting the times you let someone else do the cooking.

We have many other ideas for streamlining your finances here.

Option 3: Do a Credit Card “Fast”

someone is holding out a credit card, which has a red "no" symbol placed over itPeople spend more when using a credit card without even realizing it. One way to break the habit of mindless spending is to do a “credit fast”: 30 days of using cash. By using *only* cash, you are limited to what you can spend at any given time, and you will find that you’re forced to make very different choices.

Of course, it can feel as if you’re going naked in public without anything as backup, so some people like to take a debit card with them just in case. But first fold a sticky note over the card, covering the magnetic strip and chip. That way, to use the card, you’ll need to peel the note off, ensuring that you at least won’t be able to use it mindlessly.

Option 4: Pay Down Debt

Woman with gray hair triumphantly pumps her fist while looking at her cell phoneHopefully, by now you’ve been tracking your finances, so it should be a simple matter to look them over and calculate all your forms of debt. Look at what you owe, the size of your monthly payments, and the interest rates for each account.

Next, write down the customer service number for every single account. Then put aside some time each day to call at least one number. You can often lower your interest rates by calling and talking to someone. (If you’re like me and hate calling people with a fiery passion, this is worth it. Remind yourself that the worst thing that could happen is they’d say “no.” Either way, you have nothing to lose.)

Once you’ve gotten that squared away, make a plan for paying down those debts. You could work towards paying off the account with the highest interest rate first, or you could do the opposite and get the gratification of paying off an account more quickly. (A few years ago, Dave Ramsey developed the Snowball Method, where you pay off the smallest balances first, while paying the minimums on your other debt.) The important thing is that you have all this in one place and create a plan you can act upon.

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