Our First of the Month Financial Routine

Another month has come and gone. Where does the time go? I actually look forward to the first of the month because, financially, we treat it as a blank slate – a chance to save more than we spend, or pay off any debt accumulated throughout the past month, and increase our savings and investments.

Since I was already planning to spend some time today updating things for August, I thought I would document the process here.

1. Update My Networth Spreadsheet. Each month, I take a quick look at a simple spreadsheet I created using Microsoft Excel. It first lists all of our assets, beginning with the most liquid (our emergency savings) to our least liquid, our home and vehicles.

After tallying up our assets I then list any debts we have outstanding like car loans and the mortgage.

Not many years ago, my liabilities section of the worksheet was far greater than the assets section, but I’m proud to say we’ve flipped that around. We are still in the beginning stages of building assets, as I alluded to in last week’s post, The Secret to Building Wealth Most People Ignore, so this process doesn’t take long.

While I am a fan of Mint.com, and use it to track our budget throughout the month, I still like to update my old spreadsheet at the end of the month because I have a number of different methods of tracking networth (including and excluding the house, vehicles, etc.). At least with Mint, I don’t have to bounce around to multiple websites to get the current value of our accounts.

2. Sweep the Financial House. If we’ve budgeted properly the last month, we should have a little extra in our checking account. If that’s the case, we simply sweep it out in the form of cash and splurge on something we’ve been wanting, but have not budgeted for.

The “reward” might range from a new book for every member of the family to a nice meal out, or some new electronic gadget, or maybe even a small piece of furniture for the house. It’s our way of rewarding ourselves for a job well done without harming the next month’s budget, and without going into debt.

3. Pay Off the Credit Card. We do this at the end of each month for expenses incurred that month and charged to the credit card. I know I could “float” these transactions another month or so interest free, but I like to start the month with a zero balance, and because we plan for it, the money is there in the budget to do so. If we go over our allotted budget, and add more to our credit card than we planned for, we move a little from savings to pay it off and move forward.

We don’t have to dwell on the credit card overspending – moving money from savings serves as our “slap on the wrist” for overspending on the card, and it motivates us to do better the next month to replenish the savings balance. I’d rather do that than pay interest.

4. Establish Big Goals for the Month. Each month, my wife and I sit down and set a big goal or two. “Let’s try to save half our income,” or, “Let’s make a $1,000 extra payment on the mortgage.”

Naturally, some months the budget just won’t allow for it, and this is the point where my wife usually reminds me. “Honey, it’s August. We have back to school shopping, the car tag renewals (which we only recently started faithfully saving for in a sinking fund), etc.” So, we’ll cut those big goals in half, but we do still set them so we have something to shoot for.

5. Establish Mini Goals for the Month. With the big stuff out of the way, now it’s time to focus on the small stuff (that usually adds up to big stuff). Each month, I look over our utilities, subscriptions, and other recurring expenses. Is there any fat to trim here?

  • When’s the last time I tried to save money on the car insurance policy?
  • Those Netflix movies have been sitting far too long on top of the DVD player, unwatched. Let’s scale back to a “one-disc-at-a-time” plan.
  • We ate out quite a bit last month. Let’s make a goal to only eat out once a week as a family this month.
  • The electric bill goes through the roof in the summer months. Could we try bumping up the thermostat a degree or two to shave a little off the electric bill?
  • Thanks to higher gas prices, we blew the fuel budget again. Let’s car pool once a week to offset the additional costs.

These little cuts to our monthly budget categories help keep that bottom line from expanding. We make sort of a game of it – trying to live on less and less each month.

6. Create a Monthly Budget. We used to sit down once every few months and work on “The Budget.” However, we found more times than not we exceeded the budget established months ago because it didn’t account for a large, necessary expense in a particular category.

These days, we only plan one month in advance, and simply use last month (and the same month last year) as a guide. For instance, we know August is back to school time, so we increase the clothing budget from what we set for June and July. In September, the budget for clothes will again drop, and probably stay low until we start looking for winter weather gear later in the fall.

For us, there are just too many unknowns to set a number and try to stick to it every single month of the year. However, we can usually predict the next 30 days or so and create a realistic spending plan covering only that period.

7. Make Regular Savings a Priority. Before we do anything with income each month, we divert a portion of it to savings. Some months, we only make the “minimum” savings contribution.

By minimum, I mean the usual contribution to our Roth IRA accounts to max out each year, and the usual amount we have deducted for the kids’ college savings, and the established amounts we have automatically funneled to our sinking funds to cover annual expenses like car tags, vacations, Christmas shopping, etc.

We also make regular contributions to our emergency fund to save for emergencies, or as Chris from MyMoneyMakeover.com calls them, a “life blitz” (I’m a sucker for a great football analogy). Life does tend to blitz when you least expect it, and if you want to avoid getting sacked, you better have some great protection in front of you in the form of a solid offensive line, I mean emergency fund.

That’s it, in a nutshell. We normally spend about an hour or so performing these updates in preparation for the new month, and maybe another hour (cumulative) throughout the month updating transactions in Mint to reflect the correct category. It’s a fairly simple plan, but it works well for us.

What types of financial activities do you perform around this time each month?


  1. Jason, I would love to see a write up that goes in-depth on you “net worth spreadsheet.” I’m a numbers guy myself and it would be interesting to see your methodolgy….

    Another great post, I’m enjoying following your musings.

  2. Have you ever checked out YNAB (You Need A Budget) software? It’s a basic software that you only need buy one time. From what I can tell, it’s very similiar to what you are doing now.
    I used to try to track my accounts & budget with MS Money, but when that option was gone I had to find something else. It took quite a bit to get used to YNAB because it makes you set & keep a budget. The goal with the program is to only live off last month’s income for this month’s expense instead of just tracking what you spend like most programs.
    I’m still trying to build my “buffer” & I’m no where near the end of the month balancing that you are. I can see progress though. The program also tracks your networth. You can set up both asset & liability accounts to either include cars & such or not.
    Since you are already doing alot of the same things, you may not need this, but I really needed help in this area!

  3. This is such a smart way to keep on track with finances. I love that you make mini goals for the month. Sometimes, what’s most important is recognizing what you want or need to accomplish, so that you have a concrete idea of what you’re doing. We’re big fans of this at ImpulseSave (http://blog.impulsesave.com/)! When you have a system and stick to it regularly, it takes a lot less time in the long run.

  4. We are in a state of transition right now so it is impossible to deal with any more than the month at hand. The moment I accepted this fact and started to work with it my stress level went down considerably! There is absolutely no way I can even try to project what/where we might be a month or a year from now so I have decided to deal with things paycheque by paycheque–put some into savings, some into emergency, tuck half the rent away out of each cheque and then stop driving myself crazy!

  5. We do the same sort of tasks around the 15th of every month. Pay off our credit card bills, fund all of our savings goals like the Roth IRA, Tax Account, Emergency Fund, Home and Auto Fund, Investment Account, Vacation Account, and the two Fun Money Accounts. Then if there is anything left, we divide it between savings and entertainment accounts. I also fill in every expense we had in our budget so we can see how we did. Altogether, I spend about 2 hours a month cleaning our financial house. 🙂

  6. I like your systematic approach to tackling financial issues.
    With this kind of regular monthly review, it would be really hard for your budget to get off track without you realizing it. Also, with seeing progress on your financial goals, that must increase the motivation to pay down debt and save.

  7. This is great! Definitely a good idea to take a look at your financial standing each month. Mind if I steal a few of these ideas? 😉

  8. During the beginning of the month, I check our expenses for the previous month, check our retirement funds and set up the bills to be paid. I focus on checking our problem areas, groceries and eating out.

  9. Thanks for this checklist. 1 and 2 I do. 3 is done automatically. 4 and 5 are done from a personal development and professional point of view and do not require every month my attention. 6 has been done once and needs only a review when there is a major change in our lives. 7: yes.

    Number 8 for me is to check the direction of the long-term trend in the stock market. Once a month I use objective indicators to come to the decision if start buying, hold or sell my index funds. In that way I build up my net worth.