Money management isn’t about being perfect 100% of the time; it’s about the practice of returning to a routine. And I would rather spend 30 minutes (or less) a week catching up then have a longer “session” a few hours per month.
Imperfect Money Management
It’s true that we all have emotional, energetic and mental obstacles that prevent us from showing up fully for our financial lives in every way…but regardless of those obstacles, you just have to commit to starting money management imperfectly. It’s perfectly fine to:
- Get started on Mint and ignore it for a month
- Set up a savings account and only put $25 in
- Choose some random funds in your employer retirement plan just to get started
- Round up to the next full dollar amount on your debt payments, but have no idea when they’ll be paid off
The point is, you made an effort…now the key is recommitting and returning.
My Money Management Routine
Someone recently asked me what I do for money management each week, and I’m in such an automatic routine, I probably didn’t do a very good job of explaining! But here it is:
1. Log into banking and see what has cleared my account and what my balances are
2. Update an excel spreadsheet that keeps track of “money timing” . . . I keep a list of:
- everything greater than $100 that will be hitting my checking account
- all autodrafts (savings and bills)
- upcoming large or one-time expenses
This way, I can factor all of that into upcoming cash flow, so I always know exactly how much extra I have in each account. It’s just a simple spreadsheet that shows Current Balance – Outstanding Charges – Upcoming Bills and Payments = What’s Left In The Account. I also keep a savings tracker of how much I am saving for taxes and other stuff, and make adjustments if I need to.
3. Pay current bills once I know what’s going on
4. Weekly, I get a Financial Summary email from Mint and log in to see where my money is going. Yes, I see this when I check my balances, but for some reason, things just resonate when I see a pretty Mint pie chart! I usually spend 15-20 minutes looking in the Trends section at the reports: Spending By Category, Spending Over Time and Net Income Over Time. I’m always looking at 6-month averages, because being self employed with variable income, averages help me more than a line-item spending plan.
5. Twice a month, I pay myself and make a deposit from business checking to personal checking. This means that if I want to buy something out of the ordinary for myself, I either wait for the paycheck to add a little extra money, or I transfer the money down from my online savings account into my personal checking. Yes, I can always put it on my credit card, but I like being intentional about what are regular, no-brainer expenses and what are special expenses.
6. Once per month, I check my 401k and see if I want to add any additional funds beyond my employee contribution (I have a Solo 401k, so I can match myself as the employer!). At this point, I also check my other investments, but I really just leave them alone and only rebalance in June and December…and as we enter a down market, I might even let it be for a whole year as things recover.
7. Once per month, I check my health savings account and if I am having a good month, I’ll put a little excess in, which just gets me to the max contribution of $3,300 sooner, so I can redirect that money to regular cash savings.
8. Once per month, I check my online, high-yield savings accounts and see if I want to add anything beyond my automatic savings. One account is nicknamed Cash Reserve, and then I’ve set up others with automatic savings and nicknamed them for my short and mid-term goals, like Taxes, Car Fund, Home Fund and Travel Fund.
Keep in mind, I don’t lather at the mouth and jump into these tasks with the same abandon that I have when I dive into a book I’ve been looking forward to reading; this is like housekeeping to me. I sit down with a huge cup of coffee and my Special K breakfast sandwich and ease into it. I might have zero interest in doing it when I start, but when I finish up, I feel good that I have regained clarity over what is going on in my personal money management realm.
Actions This Week
- Make a list. What are the top 5 financial things you’d like to take care of in the next week?
- Use your calendar. Schedule one task per day…you’ll find most only take less than 15 minutes.
- Schedule a review. Set a reminder in your schedule weekly to keep going through this process. If anything feels too overwhelming, you have my permission to defer it for a month.
And in the comments, tell me…
What money management step do you resist or defer the most?
And thanks for being part of the Creative Money Community!
P.S. You might also like my post on how I get back on track after trying to do something and failing miserably…because regrouping after messing up is part of the process of success and reaching your goals :o)
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