Have you ever stopped and thought about what you do every month to manage your money?
Or what you should do every month to manage your money properly?
Years ago the only thing I used to do on a monthly basis was pay off my credit cards and see what the balance was in my checking account.
Now that I’ve graduated college, got married, started a full-time job, and bought a house, there’s a few more things I do on a monthly basis.
Today I want to share 4 things I do every month to manage my money. Some take longer than others, but overall they do not take much time. Managing your money does not need to be time consuming.
1) Pay off credit cards
Early on in college I got in the habit of paying off my credit cards every month. It’s very easy, especially for college students and recent grads to not pay off your credit card every month. If you are in credit card debt, read this article for what actions to take to get out of credit card debt.
I’m a big fan of credit cards and have churned many of them the past few years. My wife and I have gone on trips for cheap and had free hotel rooms and flights from credit cards. Using credit cards can be extremely useful (and profitable), but only if you pay them off every month.
Credit cards offer another big advantage, which is that they make it super easy to track your spending. I have a lot of trouble recording my spending when I use cash, so even if I didn’t get rewards from credit cards I’d likely still use them whenever possible.
2) Record my income and spending in an Excel spreadsheet
Over three years ago my wife and I decided we needed to start tracking our income and expenses. I’m an excel nerd so I immediately thought of creating some sort of Excel file that would allow us to track everything in one place.
This ended up working well for us and I spend less than an hour paying off credit cards and consolidating all our income and expenses into one file. It’s actually pretty cool to look back at monthly income/expenses for nearly four years and see how things have changed (or stayed the same).
Other people have found it easier to use tools like Personal Capital, Mint, or You Need a Budget. I like the control that my process gives me for bucketing items and breaking things down into the detail I want. With that being said, it definitely would be ideal if this were possible on some of the personal finance tools and apps out there.
3) Review my paycheck
Another thing I do each month is review my paycheck. The way my paycheck is set up I have a lot of money going towards a variety of things. First, taxes are taken out. As someone who makes a side income through blogging I am constantly evaluating my tax withholding and asking myself if I’m having enough taken out.
There is also a wide variety of retirement and insurance-related deductions taking out of my paycheck. I have money going into my 401k, employee stock purchase program (ESPP), and Health Savings Account (HSA) to name the big ones. I also have money taken out of my paycheck for charitable contributions and health insurance premiums.
Once everything is taken out there really isn’t a whole lot left over. Each month I make sure that the amount being taken out is accurate and in-line with my financial plan. I don’t typically change much but it’s a good way to keep tabs on my income from my 9-5.
I almost forgot to mention my PTO balance is on my paycheck as well. Time is money.
4) Check my investments and net worth
Until a few months ago I never tracked my net worth. I had a general idea of where I was at, but I have been so focused on increasing my income the past three years that I had little motivation to track my net worth.
I finally signed up for a free Personal Capital account a couple months ago and started to link my various accounts. It’s a great way to automatically track your net worth and eliminates the time that it takes to check each account manually and throw the data in a spreadsheet. Now I can log in and within seconds I can see what my net worth is, as well as the balance of my various accounts (retirement, investment, checking, savings, etc.).
I also check my investment accounts on a monthly basis. Since starting contributing to my 401k years ago I now have a small amount built up. I like to keep tabs on it, though I need to continually remind myself that a 401k is a long-term investment and monthly fluctuations do not matter in the grand scheme of things.
I also check a couple of other investments each month. I check my company’s stock since I have built up a considerable amount through my company’s ESPP as well as another individual stock that I invested in (I talk about this specific investment here).
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There is more that I could do each month, such as set up a budget and do a more detailed analysis of how well we did against that budget, but I’m not sure it’s necessary.
Millennials should definitely spend some time each month managing their money, but unless you have a spending problem it would benefit you to spend that time and energy focusing on increasing your income. You can get started by reading our ultimate guide to side hustling.
What do you do every month to manage your money? Is there something you need to add to your monthly review process?
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I do a number of these as well. The only one I don’t really actively do as much anymore is check in on my investments. Well, I do, but since we’ve moved everything to index funds at Vanguard I’m much more hands off with it. That being said, I’m a big Excel fan myself and have a number of things I track that way. The one added thing I do is stay on top of our cash flow and monitor where clients are at for payment so we can better gauge where we’ll be that month.
FrugalRules Makes sense about the index funds. I don’t really track my 401k investments that closely because they are all in funds. I do track my employer stock since I always have 1 1/2 years worth of it (to avoid short-term capital gains) through the ESPP. I have one individual investment that I track relatively closely. Overall I think you and I have a lot in common when it comes to what we spend our time on from a tracking/management perspective.
It’s pretty similar.
I pull up Excel, take the current balance, add in our income and then take out monthly expenses. Then take out the amounts for our savings subaccounts and covering the credit card for the month. Anything left over is thrown into savings.
I check the credit card activity 2-3 times a month to verify that the charges are all ours. (By which I mean, I say, “How the heck did it add up to *that*?” and then review the charges and remember that even small expenses add up.)
AbigailP Haha I can totally relate to how you react to your credit card statement. Sometimes I see a big number and I’m thinking “WHAT?!?” but then going through each charge it makes sense.
I do these things more than monthly :) One “resolution” I have is to monitor my expenses in excel. I’m not a frivolous spender but I think it’s time for me to get serious and really see how much I’m spending on a monthly basis.
Great habits! We also scan the checking account just to make sure there isn’t any odd activity.
My habits are similar, except I tend to check my credit card activity + debit card transactions once a week to make sure none of them are fraudulent. After having my credit card info compromised twice in the past year (without losing any of them), I’ve been way more diligent (more like paranoid) with checking, haha.
ferventfinance I put off doing this for a long time, but once I finally did it was a big win. I love that I have historical spending (and income) and can see how it’s changed month-over-month (and now year-over-year). I’d recommend it!
Jaime Lila I agree it’s not easy to invest when you are in college. I don’t think it’s a coincidence that so many PF writers and bloggers have the same habits!
Pretend to Be Poor I do the same thing when I record my income/expenses. I download all the checking account data, and honestly I probably check it on a weekly basis just to see where we are at.
Anum I actually check my checking account weekly as well. Wow that’s bad luck to have your credit card info compromised twice in a year. I’m so sorry to hear that.
I’m getting into the habit of using an excel sheet to record my income. I started doing it last year, but stopped. This year I have to keep doing it. I also use Mint and recently signed up with Personal Capital.
I must admit…I’m pretty bad about reviewing my paycheck and checking my investments, but I do use an Excel spreadsheet (also a E-nerd). It’s great for doing comparative analysis. But these are great tips!
Laura Beth @ How To Get Rich Slowly I think Excel nerds have a huge advantage when it comes to tracking and managing your finances. I love the fact that I have all my data formatted how I want. Super easy to analyze using a pivot table.
Jason @ The Butler Journal It takes some time and effort to track everything in Excel, but I think it’s more valuable than people think. I love the fact I can look back at my monthly spending the past 3+ years and see how it’s changed over time.
I love Excel for it’s flexibility but I switched over to Mint last year. I’ve noticed that it’s been flaky lately so I’m looking into switching over again to Personal Capital. It was the convenience that I really like…hard to get away from that now.
On the upside, I’ll be paying off all my debt soon so it will be fun to start tracking my net worth again!
Lindsey at Sense Personal Capital appears to be capable of linking nearly any account. One thing I’ve heard about Mint is that some data doesn’t flow into it properly (i.e. certain credit cards). Granted I heard that a couple years ago so I’m not sure how well it works today.
I only check my paycheck about once a quarter unless I’m changing withholdings, but last time I checked it I noticed that my PTO balance was on there too. My response, “Good night, I need to take a vacation.” For quite a while I was only accruing at a rate of 2 weeks per year and I had 4 weeks of vacation saved up. (Though a big part of the reason is that my team kept getting sucked into emergency situations, so my manager told us that we should begin taking “comp” time off as soon as humanly possible even though he was having trouble getting it cleared through HR).
Hannah UnplannedFinance Yeah sometimes there are things on paychecks that are surprises, which is why I typically check it quite a bit. Our PTO always looks off the first month of the year so I will definitely be looking at it closely the next couple paychecks.
You surprised me by saying you checked your paycheck….that’s not on the usual list of things people do each month. :) I can’t say that I check mine every month…but I do know what the “usual” amount is, and I do look at the amount in my paystatement (and then again when reconciling my checking account). If the amount is different for any reason, I know it ‘s time to investigate!
DebtChronicles My paycheck isn’t typically that exciting because it’s usually about the same. But there are so many things being taken out of it automatically (like 401k) that it’s kind of nice to take a peak and feel good about some of the positive things that are being taken out of it.
What do you do every month to manage your money? For us, the most important thing we do is actually before the month even begins! We prepare our spending plan (yes, a budget) to map out our expectations for the coming month. For a natural saver like me, I find the process makes it EASIER to spend as I know our goals for the month are accounted for already. Now that we’ve been doing it for so long, it takes very little time each month, but the peace of mind it brings is invaluable!
Of course we do a lot of other other common sense things: balance our checking accounts, review our investments (quarterly actually), pay our bills on time, etc.
John
Paying off your credit card every month is sooo important. If I could go back in time, I’d make my 20 something self always do this no matter what.