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A financial cleanse to close out your year? Here’s how to know if it’s right for you

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As 2023 gradually approaches its end, you may be looking back at some of the goals you set at the beginning of the year — and that includes taking a close look at how your finances played out.

One way to accomplish this is by doing a financial cleanse. A financial cleanse is a check-in on your money to help you see where you stand today, how you got there and what you can do the rest of the year to improve. Below, CNBC Select explains further what a financial cleanse entails, plus we cover how you can begin and our take on whether it’s really worth it.

What we’ll cover

What does a financial cleanse entail?

A financial cleanse involves a period of financial evaluation, budgeting and mindful spending to help you reset your financial habits and make healthier money choices.

It’s not always easy to sit down and face your finances, but if you have any financial goals or burdens looming over you that you have no clue how to tackle, there’s a good chance that a financial cleanse could be just what you need.

Some of these scenarios could look like:

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Figuring out each of these hurdles is not only essential to managing your money well, but they’re of timely importance. The sooner you can address things like debt payoff, your spending and your saving, the more money you’ll literally have.

For example, if you’re carrying a credit card balance month to month, the interest that’s accruing is adding tens, if not hundreds, of dollars to what you owe. Figuring out a debt payoff plan ASAP is crucial to saving you money. Balance transfer credit cards like the Wells Fargo Reflect® Card and the Citi Simplicity® Card both offer no interest for almost two years and with a $0 annual fee.

Wells Fargo Reflect® Card

On Wells Fargo secure site

  • Rewards

  • Welcome bonus

  • Annual fee

  • Intro APR

    0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 18.24%, 24.74%, 29.99% variable APR thereafter.

  • Regular APR

    18.24%, 24.74%, 29.99% variable APR on purchases and balance transfers

  • Balance transfer fee

    Balance transfers fee of 5%, min $5.

  • Foreign transaction fee

  • Credit needed

Citi Simplicity® Card

Information about the Citi Simplicity® Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

  • Rewards

  • Welcome bonus

  • Annual fee

  • Intro APR

    0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening.

  • Regular APR

  • Balance transfer fee

    Introductory fee of 3% ($5 minimum) for transfers completed within the first 4 months of account opening, then up to 5% ($5 minimum).

  • Foreign transaction fee

  • Credit needed

LendingClub High-Yield Savings

LendingClub Bank, N.A., Member FDIC

  • Annual Percentage Yield (APY)

  • Minimum balance

    No minimum balance requirement after $100.00 to open the account

  • Monthly fee

  • Maximum transactions

  • Excessive transactions fee

  • Overdraft fees

  • Offer checking account?

  • Offer ATM card?

UFB High Yield Savings

UFB High Yield Savings is offered by Axos Bank, a Member FDIC.

  • Annual Percentage Yield (APY)

  • Minimum balance

  • Monthly fee

  • Maximum transactions

    No max number of transactions; max transfer amounts may apply

  • Excessive transactions fee

  • Overdraft fee

    Overdraft fees may be charged, according to the terms, but a specific amount is not specified; overdraft protection service available

  • Offer checking account?

  • Offer ATM card?

How to begin?

How you decide to go about a financial cleanse is completely up to you. Overall, you want to have certain financial goals in mind and make sure all your finances are organized. But knowing just when and where to start is usually the toughest part. Luckily, there are various models you can follow to help you get started and guide you through the process.

“There’s a misconception that wealth is a once-in-a-lifetime decision or transformation that you make. It’s just a product of recurring habits compounded over long periods of time.”

Marcus Holzberg

CFP at Holzberg Wealth Management

Ashley Feinstein Gerstley, a CFP®, suggests in her book “The 30-Day Money Cleanse” that people tackle a different challenge each week.

“I found the weekly structure really helpful because people are really busy,” Gerstley tells CNBC Select. “I’m a big proponent of breaking up actions into steps that feel manageable so that we take it and get to the end.”

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With Gerstley’s financial cleanse method, each week is designated to a particular goal:

  • Week one: Track your spending and cut out purchases you may deem frivolous
  • Week two: Take a close look at your spending and see what makes you happy
  • Week three: Ensure that what you’re putting your money toward are things that you value
  • Week four: Build a money dream team of people who can help you in your process and also hold you accountable

Throughout her book, Gerstley also shares various inspirational quotes and helpful tips to get you through each week. Knowing that there are people who begin the cleanse and stop in between, she encourages them to continue where they left off even if it’s not done perfectly.

Is a financial cleanse worth it? 

What we like about the financial cleanse is that it’s an option and an opportunity to better your finances. Instead of waiting to figure out the “perfect” way to fix your finances, the cleanse offers steps to ease into bettering your money immediately without having to really commit all the way if you find it’s not helpful for you.

Marcus Holzberg, a CFP at Holzberg Wealth Management, explains that being focused on finding the perfect strategy can inhibit us from taking the first step. He encourages people to try the financial cleanse and if it doesn’t work out, then move on.

“There’s a misconception that wealth is a once-in-a-lifetime decision or transformation that you make,” Holzberg says. “It’s just a product of recurring habits compounded over long periods of time.”

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Bottom line

A financial cleanse may be good for anyone, but especially if you’re approaching the end of the year and finding that you could use better money management. For a period of time, you’d dedicate some effort toward organizing your finances, budgeting and mindful spending. The worst-case scenario is you try and find it doesn’t work for you. Whether you prefer approaching the cleanse daily over a 30-day period or on a weekly basis, the key is taking it step by step.

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Meet our experts

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal finance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best credit cards and savings accounts.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.



Source: CNBC

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