Why You Should Do a Monthly Financial Check In
Updated: Dec 13, 2019
PRO TIP: at least once a month, check yo' self… (or at least your finances).
And if you’re like us and can’t remember to do something that’s not on your calendar… add it to your calendar! Seriously, we couldn’t live without Google Calendar, it’s great.
We do our monthly financial check in as a couple and make it a date night. Single? Or in some other relationship status? Don’t worry, we didn’t forget about you. You, too, should do a monthly financial check in!
I know what you’re thinking...a “monthly financial check in” sounds about as exciting as watching paint dry. Which is why ours is called “Booze and Budget.” Each of us pours a glass of wine (or pops a beer) before we get down to business. Just by adding in something as simple as a treat, it gives what some might consider to be a boring subject a much more positive connotation. Whatever you consider a small indulgence (Wine & Wealth, Chocolate & Change, or Netflix and Numbers), be sure to reward yourself for being financially responsible, it goes a long way.
Come along for a stroll through our brains as we explain how we go about a Booze and Budget evening. Feel free to ditch what doesn’t work for you and keep what does because as we all know, money is personal. For example, our preference is to use Mint for budgeting but many people have strong opinions about their own tool of choice. Just use what you’re comfortable with. In the end, it’s just 1’s and 0’s anyway.
“Feel free to ditch what doesn’t work for you and keep what does because as we all know, money is personal.”
Review actual spending from the month before.
Budget for the current month.
Update Net Worth tracking.
Work toward your goals.
I.C.E. (In Case of Emergency)
Review Your Actual Spending
A monthly budget is merely a tool. It isn’t good or bad. It’s simply some numbers on a piece of paper (or in a spreadsheet, if you prefer).
How your actual spending compares to your budget is where the rubber meets the road.
Whether you have trouble keeping your spending under control or are more of a saver, you should aim to stay within the amount you have budgeted for each category (which includes saving, investing, and debt payments). If you don’t have a budget yet, don’t worry. Just create one ASAP and start tracking your spending...there’s no time like the present!
Questions to ask yourself:
In which categories did you overspend? And why?
How can you automate more of the financial decisions that support your goals? (auto transfer money into savings on days you get paid, for example)
Do you notice any mistakes such as fees you believe you shouldn’t have been charged? Make a note to call the vendor and/or bank about anything you don’t recognize.
Did you feel too restricted by your budget? If so, be sure to allow a small amount of money to splurge on unplanned, “just because” expenses. No one is perfect and we all work hard to earn a living. Allow yourself some grace (and a little bit of fun) no matter how aggressive you are with your saving and investing goals. For example, we pay ourselves a little bit of “fun money” each month to spend on whatever we want.
Budget for The Current Month
Begin with last month’s budget and make any necessary adjustments. This part should take no time at all once you become more familiar with your regular expenses and budget amounts that work for your lifestyle (and really...isn’t your financial future worth 30 minutes once a month? That’s only 6 hours a year!)
Be sure to consider the following:
Are there any quarterly expenses due this month? For us, this would include Homeowners Association dues.
Are there any birthdays or other occasions you’ll be celebrating for which you’d like to purchase a gift?
Are you paid every other Friday and the current month has three Fridays? If so, calculate your expected income as a “three paycheck” month! (*cash register sound*)
Do you have an out-of-town trip planned? If so, your spending is likely to be higher on the days that you’re out of town.
Note: We prefer zero-sum budgeting where every dollar is allocated. What if you have extra income that hasn’t yet been allocated to a spending category? Why not increase the Savings line item!
The best piece of advice we have for coming up with the best budget for you is to be realistic. Do you have an annual income of $20k? Don’t plan on saving $20k for the year. It’s not very realistic to save every penny you make if you’re also trying to support yourself.
Update Your Net Worth Tracking
By now you know how and why to track your net worth. A monthly financial check-in (“booze and budget” session) is the perfect time to check all of the balances of your accounts. Then calculate the month-over-month change, which will quantify how much better off you are (hopefully) compared to last month. This exercise will take a minimal amount of time if you already integrate your accounts with Mint or Personal Capital. Both are great personal finance tools (although in different ways...check back for a review of these products and more!).
Work Toward Your Goals
When you and your significant other are in sync financially, it makes it much easier to work toward and achieve goals that you have in common. Buying your first house? Maxing out your retirement contributions? Planning to start a family? Both individuals in a couple should participate equally in putting that plan together so you’re equally invested (and excited!).
All you single people out there aren’t left out of this one. Working toward a specific goal can be a great motivational tool.
I.C.E (In Case of Emergency)
Assuming you have any shared accounts or other shared assets as a couple, it may be the case that one person manages the bills, investments, and makes all of the financial decisions. Often one person may enjoy it more. Or sleeps better at night knowing all of the details of your financial life. Or you happen to follow traditional gender roles, same as your individual families when you were growing up.
Imagine for a second what would happen if the person who handles the finances was unable to do those things for a day? A week? How about a month? The other person probably wouldn’t know where to begin. Banking passwords, timing of bill payments, account numbers, balances, etc. Do your significant other a huge favor by making sure they know where to find this important information if they needed to. This is a major reason that we do our monthly Booze and Budget together.
If you’re not in a relationship, consider talking with a close family member or friend about what they should do in the case of an emergency.
While it’s not the most pleasant thing to consider, having a plan is the smart thing to do.
We hope you’re now convinced why you should have a monthly financial check in. And if not, please feel free to share in the comments why not. We’re always happy to learn from others’ experiences!
-Eddie & Megan
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