Since we are nearing the end of yet another month, we thought now would be a good time to outline our monthly process with regards to our personal finances. Here is a general outline of our Monthly Money Routine that you can use to personalize your own!.
Personal finance is a regular activity in your life that you have to partake in. You won’t be able to organize your finances in a weekend and be set for life. It is a repetitive task that must be regularly monitored and adjusted as you go through life.
This is especially true at the beginning of your journey. It will be difficult and uncomfortable as you start. And you will feel yourself not meeting many of your goals but you have to get through the bad to get to the good.
With a Monthly Money Routine, you will be able to check-in on your finances from a big-picture perspective every month to make adjustments and review what worked and what didn’t.
Here are the steps we take each month to ensure we are on the same page as each other and on track towards our longer-term goals.
Beginning of the Month
The beginning of the month is the time to start anew. Clean sheets and prepared goals allow you to reorganize so come the 15th you don’t suddenly realize you are completely lost!
Review the Calendar
As a new month approaches, usually a week or so before, look over the new month’s calendar. You will be looking for any potential spending. Maybe that will be nights out with friends, birthdays, car registration due dates, holidays, doctor’s appointments, etc.
With this information, you can plan for any additional spending and keep those dates on your radar.
You will also want to review the next few months briefly to ensure there is nothing too large that you will need to plan ahead for (i.e. Christmas or a wedding).
Keep in mind we are not avid budgeters. Although we set an overall spending goal for the month, this number doesn’t often change, nor do we set up specific category budgets. If you do feel like more detailed budgeting is a better option for you, be sure to set your categories’ specific budgets as you review the calendar!
Set Monthly Goals
Next up, you will want to set your monthly goals. You will want to do this before the month starts so Day 1 you are ready with a plan in mind. Every day counts.
When making your goals, be sure to review your annual goals to ensure these monthly goals will help get you closer.
We always have at least one money goal whether that is to save more, have no spend days, get a new rewards credit card, etc. And then I will add 2-3 other personal, relationship, or work-related goals to ensure all areas of my life are oriented.
Include the Monthly Money Challenge
Each month we are setting a monthly money challenge for ourselves, and hopefully for you! Be sure to add the challenge into your monthly goals so you can make it a top financial priority for the month!
Check out our first official month, October’s No Spend Challenge.
With each month, you will want to discern what the challenge is and start to game plan how you can participate. There may be some sort of tracker you need to set up. Or maybe you need to purchase something in advance in order to properly complete the goal. For example, The Budget Mom challenges her following to not purchase coffee all month so you may need to buy the right kind of coffee or creamer so you can successfully accomplish the challenge.
Set Up New Daily Spend Sheets
The first of the month is usually a shopping day as we are crunching our spending at the very end of the month (at least recently, see September Spending Report). In order to stay on top of our daily spending, I need to ensure I have my sheets set up ahead of time.
This means having them printed and set up with any categorized budgets. I will staple everything together and stick it in the filing cabinet by my desk for quick and easy access.
PS my filing cabinet is only organized because I obsessed over the book, Getting Things Done. Total game changer.
What are Daily Spend Sheets?
We manually track our spending on a (mostly) daily basis. Tracking manually helps make spending a lot more real as you have to write down the total amount for every transaction. It allows us to see exactly how close we are to our set budget after each transaction.
With these Daily Spend Sheets, we can have an organized hub to track all our transactions and won’t miss any important details.
Now, we won’t be tracking every dollar we spend manually for the rest of our lives, but we will always know where our money is going. Right now, these manual trackers help us to keep a budget as we hone in some of our spending patterns.
End of the Month
After getting everything set up for a successful month of tracking your spending and hitting financial goals, you will need to follow up and recap at the end of the month. Here are the four steps we take at the end of every month.
Update Net Worth
This has been a newer monthly task for us as we only started tracking our net worth in March of this year. I wish we would have started so much sooner, though!
It has been so motivating for us to track our growing net worth with each passing month. We just recently reached the $200K mark and I am already getting excited to reach a quarter of a million. (CRAZY!)
Take a look at the Net Worth Tracker we use. This is Google Spreadsheet so we both can access it.
Knowing your net worth is an important step towards financial independence. How can you grow your net worth if you don’t even know what it is?
Update Savings Trackers
This is not a necessary step by any means, but it is a fun one, nonetheless.
Debt Free Charts also makes perfect printable sheets to fill in as you pay off debt or reach savings goals!
I like to pretend I am creative and make my own in my bullet journal. Maybe one day, I’ll share my “art.”
Setting goals, monthly, annual, daily, what have you, is fine and well, but if you never look back to see if you met them and WHY or why not, you will never grow to continue reaching more and more goals. It may be luck that you hit a goal or maybe you set the goal too easy for yourself.
I usually do this step as I start to plan my goals for the next month so I can work to make more accurate and pointed goals.
Lastly, the BIG ONE! Analyzing your spending for the month.
Take a look at our How to Track Your Spending post for a more detailed review of how to track and analyze your spending. Here is a quick overview though.
Export to the Expense Tracker
I review Mint every Friday to ensure all the transactions are being coded correctly and labels are added. We use the labels to help further categorize our spending (fixed expenses, variable expenses, vacations, etc.).
Since I do this once a week, I don’t have too much to update at the very end of the month.
From there, I transfer the entire month of transactions from Nate’s and my accounts to this Excel sheet that I use.
Once I have it copied and formated in the Excel sheet, I will make any additional adjustments needed. Sometimes I see that we have double-labeled an item or categorized it under an old category. I just clean up the sheet and all the expenses to ensure it is all up to date.
Close Out Daily Spending Trackers
After a full month of updating your Daily Spending Trackers you should have sheets choc-full of transactions (or hopefully, not).
The first step to closing them out is balancing them to the transactions we just exported from Mint. This is a step I find necessary because I am bound to forget some online purchase or a purchase I made where I didn’t get the receipt.
To balance the sheets, I look over our variable spending category as a whole and ensure my total balance equals out. If not, I will scroll through all the transactions to ensure I have everything. Not a perfect system, but I can usually suss out the suspects. This is even easier though if you use the Daily Spending Trackers to budget for particular categories.
Once you are all balanced, you can review how you did to budget. This is the only way we track a budget so closing out our spending sheets is an important part of seeing if we were under and over those preset budget goals.
Review and Analyze
Now, for the MOST IMPORTANT TASK! Reviewing your categories, labels, transactions, events, habits.
You may track your expenses every day and label everything in such an organized fashion in Mint, but it will get you nowhere if you never step back and look at the big picture.
I will usually review this myself, first, to ensure there are no mistakes and have a good understanding of how we did.
Include a Loved One
Then once it’s all set up, I will review this with Nate. We go over each line together and will ask questions of each other’s purchases. And we will game plan for the next month how we can do better or repeat what worked for that month.
This has been the most important aspect of improving our finances over the past two years. And doing it together has made us both feel included and accountable for our results.
Phew, that concludes our Monthly Money Routine. We hope that it can provide some pointers on where to start getting a grasp on your personal finances. Just remember, personal finance is personal, so if these steps aren’t exactly for you, change them up, add new ones. It needs to be what works for you and what gets you results!
Do you have a different Monthly Money Routine? What would you change? Let us know in the comments!