Erica and Jordan at the The Worth Project have the goal of sharing their personal finance experience to help readers improve their financial lives. We regularly partner with companies that share that same vision. Some of the links in this post may be from our partners. Here's how we make money.
This month was rough money-wise, but great life-wise. You win some, you lose some, right?
Thankfully we asked us ourselves years ago, “how do we organize our finances?” so we don’t feel out of control when we have an off-month or a life event happens.
A small example of a life event: our baby is arriving soon!
With a baby arriving, I have been going a little overboard buying things that I hope will make life easier. We’ve also had a slew of doctors bills, which I’m sure is only the tip of the iceberg of what is about to come our way.
At the same time, Jordan and I have been trying to live our best lives before we are faced with less freedom. This has included a lot of nights on the town, which has been less than comfortable as I waddle my way around London.
While we haven’t been super responsible with our cash as of late, it has made me even more thankful for the system we set up years ago to organize our finances. It’s not perfect, but it’s the perfect solution for us.
And as life gets more hectic I know that Jordan and I will want to spend less time with the management of our finances and more time living life (or trying to get sleep – I hear that’s not easy when you have a newborn).
The basics of how we organize our finances
I’ve talked about how we automate our finances and then budget without a budget, and we keep it organized with Personal Capital and my How to Organize Your Finances Spreadsheet, but I’ve never really shared what we do each month to keep things in check.
This month was one of those months where we had to spend a little extra effort on our end of month check-in. It still only took 15 minutes and we feel like we have our life back in control.
Ok, we feel like we have our money life back in control. The rest of our life? We’re pretty screwed.
- We set our money on autopilot, meaning our bills and transfers to savings/investments/individual spending accounts are done automatically
- We live off the rest of this spending money for the remainder of the month without tracking spending categories or budgets (i.e., we don’t have a “grocery” or “eating out” budget category).
- We check in monthly to adjust as needed (which was really needed this month – see below)
Once this was all set up, the monthly check-ins are 15 minutes. 15 minutes per month to leave us feeling like totally responsible adults with organized finances.
5 steps to organize your money
We bust out these 5 steps in 15 minutes or less. Not every step is required every month. Some months, we don’t have any irregular bills so that step takes 0 minutes.
Once your money system is set up, it should take you less than 15 minutes to organize your finances.
Step 1: Review bank accounts & credit cards
Duration: 5 minutes
While we have everything set up to be paid automatically – even our credit cards – we do spend some time reviewing our expenditures from the last month. We do this for three reasons:
- Fraud, obvi. While banks and credit card companies do try to flag fraudulent transactions, you don’t want to log into your account 3 months from now and find that you have $-8,427 because some creep has been borrowing your account number and spending your cash.
- Unexpected things do pop up. Like this month. Not only did we have a lot of extra expenditures (I regret nothing!), we also had some unexpected bills that we forgot to save for (hi, annual HOA dues). When unexpected things pop up, we make a note of them and figure out if we need to make adjustments to our monthly transfers.
- Was our spending out of line? We do a once over on our account and look at all transactions trying to assess whether we spent on the things that made us happiest. Or did we have one too many mediocre late-night take out runs? It happens and when it does, we course correct for the next month.
Step 2: Check our savings & investment transfers
Duration: 2 minutes
We like to give ourselves a little pat on the back when we’ve done something good – like transferring money to savings and investing. While our savings and investment transfers happen automatically, we take a little peek into our accounts to make sure they all arrived safely and then marvel at the fact that our balance is growing.
We do an overall check through our Personal Capital dashboard (screenshot below). We’ll check in on all of our bank account balances and see what’s happened over the last month. We can click on any bank account to see the transactions for the month. If anything looks out of whack, we’ll log into our actual bank account to check it out.
Step 3: Pay any irregular bills
Duration: 0-5 minutes per month
This happens every few months, but we will have an irregular bill pop-up, like property taxes. I usually pop a reminder in my calendar so I’m alerted a week before it’s due. We make sure those bills get paid.
Most of the time, using our budget without a budget system we’ve set up paying these irregular bills is a breeze. We’ve been saving for these bills automatically over the months so when our property tax bill comes in, we have money sitting in a savings account ready and waiting to make that payment.
For example, if our property tax was $6,000 per year, we’d set up a transfer of $500 per month into a savings account labeled “property tax.” When the bill comes in we’d take the money from that account and pay it. Easy.
But there are those times when we get surprised by a bill, like what happened this month. We purchased a property last year and there are annual HOA dues that we owe. Last year we paid them right around the time we bought the property, so the fact that this was an annual payment got lost in the details. We didn’t set up a bank account for a monthly transfer to cover this bill. This year, we just had the bill arrive and we didn’t have the cash earmarked to pay it. We had to (annoyingly) take money out of a different savings account to pay it. Lesson learned.
Step 4: Adjust financial goals & transfers
Duration: 0-5 minutes per month
Every once in a while we’ll need to adjust our goals and transfers. This happens because we forget about a bill – like our HOA dues – or because our goals have changed.
For example, we’re almost done saving for our Freedom Fund. As soon as we hit our goal, we’ll stop that automatic transfer and figure out what we want to do next with that cash that was part of the automatic monthly transfer.
Making these changes is so much easier and faster once we filled out the How to Organize Your Finances Spreadsheet.
If we don’t have a new goal that makes us excited, it does take some time to come up with a new goal that we can both get behind. To help us get into that brainstorming mood, we’ll often start with the question, “How do I want to live?”
You can read more about that process in this on the right way to set goals.
Step 5: Talk about what might be up next
Duration: 0-5 minutes per month
There’s always something around the corner, right? That’s what makes life exciting. It might be that we have a trip coming up that we need to book travel for, or that we have a new opportunity with work. Lately, it’s been a little less exciting as we’ve been talking about childcare options and what we’re going to spend (ugh). But soon that discussion will be part of our automatic bill pay each month in step 1…I hope.
If we need to talk about anything with our computers out and our accounts up, this is our chance to do it.
Organize your finances today!
Having a system that is easy and a monthly check-in that is quick has made being responsible for our cash so much easier. We don’t have the time – or the patience – to pour over financial details every month. With these 5 steps in place we know that everything is taken care of, seamlessly.
Get deeper on organizing your finances
- Create a spending plan that makes you feel good about your money
- Get it Together Guide: to keep your money organized. Really.
- Curing a case of the somedays – our budgeting process and The Worth Project Budget worksheet
- Personal Capital Tutorial Video – what I wish I had when I started using the tool
This post was originally published on April 17th, 2018 and updated on August 1st, 2019.
Erica Gellerman is a CPA, MBA, personal finance writer, and founder of The Worth Project: personal finance and family travel. website. Her work has been featured on Forbes, Money, Business Insider, The Everygirl, The Everymom, and Lifehacker. When she's not writing about personal finance you can find Erica exploring Europe from her temporary home base in London.
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