How I conduct a monthly financial check-in

How I conduct a monthly financial check-in

October 15, 2018 2 By Mindy

Sometimes I wish I could take a time machine back to my twenties. The years when I would fritter away my meager income on cheap wine, cigarettes, plasticky ready meals, and cramped Ryanair flights. The years before I encountered the world of FIRE and personal finance.

I had no idea how much I was spending. Each year I was firmly consolidating my negative net worth: barely making a dent in my student loans, and spending most of my earnings.

I was sensible enough to leave a certain amount in my bank account intact for emergencies, or for when I found myself between jobs while building a career in non-profits.

This amount probably didn’t exceed £2,000. It didn’t even cross my mind to save any more. I was firmly living in the present, rather than thinking of some unknown future. I was baffled by the frugal behaviour of some of my friends saving for a house deposit.

But if I had to re-live my 20s, I would honestly do exactly the same things. It was a fun decade. My carefree attitude enabled me to take risks, move across the world, and follow my passion 

With one exception: I would conduct a monthly financial check-in.

If I had followed a simple practice of checking my finances on a monthly basis in my twenties, I would now find myself miles ahead in terms of savings and investments.

Just spending 20 minutes each month looking at how much money I had and where it was going would have given me much more clarity and purpose with my finances.

I probably would have spent my money in much the same way. I certainly enjoyed nattering with my flatmates over cheap wine into the late night, and taking city breaks in Europe.

But I might have re-thought the embarrassing amount of money I spent on microwave meals and Pick n’ Mix.

I might have realised that I was digging myself into a financial black hole, and taken steps to build healthier financial habits.

What is a monthly financial check-in?

The way you conduct a monthly financial check-in might differ from person to person. But essentially, it involves you sitting down and taking stock of your finances once a month.

This would include checking how much you have in your different bank accounts, and investment and pension accounts (if any).

You’ll have to check balances on your loans and credit cards as well, and see what you might owe in bills.

This is the most basic purpose of a monthly financial check-in: making sure you have enough money to cover your outgoings every month.

But as you get more knowledgeable about managing your finances, you might start calculating your savings rate, and your overall net worth.

You might even develop a budget for the next month (although I haven’t quite gotten that far).

How I conduct a monthly financial check-in

I truly look forward to the 1st of each month because I get to have some time with my favourite spreadsheet.

I’m a total geek, but I love my Excel spreadsheet. It’s been with me since 2013, ever since I had my financial awakening and started reading tomes of wisdom like Your Money or Your Life (affiliate link).

I block off an hour of time, make a cup of tea, and get comfortable with my lap-top in front of me. From there, I start filling out the different columns, which will eventually reveal how I’ve done over the course of the month.

Step one: Check the value of my assets (what I own)

First I check my bank balances. I log into my online banking for my different bank accounts (I have two, one in the UK, and one in Thailand), and I enter the balances into the spreadsheet.

Second, I check the value of my investments and pension fund. I have money invested with Zopa (a peer-to-peer lender), Hargreaves & Landsdown, and Legal & General. I check all of the websites, and enter the current value of the investments into Excel.

Once I’ve done this know how much I have in assets, the positive side of my personal balance sheet. If you own a home, you might decide to add its value to your assets.

Step two: Check my liabilities (what I owe)

Although I’ve made rapid progress on paying down my student loan, the pesky thing is still hanging around. So each month I log into the Student Loan Repayment website to see how much it’s gone down, and enter the balance in Excel.

I don’t actually need to log in to see the balance, since I already know how much I’m paying it down each month, and the amount that gets added in interest each month, but I just like the satisfaction.

At this stage I also check my UK credit-card balance to make sure I’ve not gone a little crazy on books. I don’t enter the balance into the spreadsheet, since I know the payment will be reflected in my bank balance the next month.

Step three: Calculate my net worth

Actually Excel calculates my net worth for me. The formula deducts the loan value from my total assets value and ta-da, there’s my net worth.

I’ve also got a little graph that updates automatically, which shows my progress month to month. Right now it’s showing steady upward growth, but that’s going to change now that I’m mini-retired!

Here’s what these columns looks like when put together (example figures):

Savings     Total AssetsDebtMy net worth
MonthCashInvestmentsStudent Loan
UKThaiZopaS&S ISAPension

Step four: Enter my monthly spending   

On the second tab of my spreadsheet, I start entering my spending in the different categories:

  • Groceries
  • Eating out (necessary)
  • Eating out (entertainment)
  • Drinking
  • etc.

I’ve been tracking all my spending each and every day since I started this spreadsheet, logging each expense into my Spending Log app in my phone. It’s now so ingrained that I never really forget to enter a purchase.

I total up the monthly expenses, and then just observe if it was a higher or lower expenditure amount than usual. Since I don’t budget for each category (e.g. allocated £150 for groceries each month), I don’t go through each category to see if I’ve overspent.

I don’t follow a budget because I don’t think it’s necessary. Just having the practice of entering in every purchase means I’m already aware of my spending. And by having a goal to save 50-60% of my income, I keep an eye on the total amount I’ve spent so far in the month on my Spending Log app.

Step five: Find out my savings rate

On the third and final tab on the spreadsheet, I enter in my income for the month. Usually this is the amount in my monthly payslip from work. I then take the total amount of expenditure for the month from the second spreadsheet tab and copy it into a cell. The spreadsheet then calculates the difference and shows me the percentage of income I have saved for the month.

Diff inc/exp887.82807.49
% saved60%54%

Should you conduct a monthly financial check-in?

If you’ve read this far, you might be thinking of starting a monthly practice of checking in with your finances, if you haven’t already.

I would definitely say that just starting with this practice – looking at how much you have, and how you’ve been spending it – can spur some further financial changes that transform your relationship with money for the better.

conduct monthly financial check-in