A self-professed “fly by the seat of my pants” kind of gal, I often shun routines in my everyday life. Except for two things: breakfast and finances. I love me some tasty oatmeal w/ blueberries and a cup of Sweet Dreams tea (yep, I drink “sleepy” tea to wake up in the morning–I’ve never had coffee in my life!!). But I love my Excel spreadsheets even more.
It’s obvious that a lot has been written on budgets, tracking spending, getting out of debt, etc. What I’ve personally found lacking is information on how people really do these things.
Of course you can do a quick Google search that will yield a plethora of ‘I got out of debt by doing X, Y, and Z” links, but how many of those links actually tell you what the person has done in detail? I know to cut my expenses, track my spending, bring in more income, etc, etc, etc.
But HOW do you do that?
My answer is to have a routine. Merriam Webster defines routine as “habitual or mechanical performance of an established procedure.” There aren’t many areas in life other than finances where I’d insist that performing an established procedure must be habitual. Simply stated, if you don’t consistently manage your money, are you really in control of it?
My routine is simple, yet has many steps:
- Each month, I set monthly goals and a budget based on previous spending patterns, anticipated income, and life events (ie. do I have a wedding to attend or a vacation coming up?)
- I track every penny I spend and these totals are entered into my Excel spreadsheet’s various tabs: a separate budget tab for each month and miscellaneous spending tabs for every two months so I get a better sense of spending trends over time
- My miscellaneous spending is broken up into categories such as restaurants, groceries, gas, pet expenses, condo reno expenses, etc. and the sheet is auto-formatted to keep running totals and tell me how much I have left to spend (like what Mint.com does–I also love me some formulas and macros)
- I keep all receipts and on Mondays and Fridays, I match them to my credit card statement to make sure I was charged correctly, then I enter the totals in my spreadsheets & throw away any receipts I don’t need to save for warranties, etc.
- If I pay with cash, I write those expenditures down on a small notepad–if I take $40 out of my account, I don’t just record $40; I continue to track each individual expense so I still know how I’m spending my money
- On the 25th of each month, I calculate my Net Worth, update my mortgage tabs (keeps track of balances, payment amounts and equity), update my savings tabs (EF, LT savings, Roth IRA, 403b), and update my student loan debt tab (it lists each loan balance, interest rate, and the date of each payment)
I’ll be the first one to admit that this may seem a bit overwhelming and tedious. But as a reformed spendaholic, I know myself well enough to know that I need to keep tabs (pun intended!) on myself in order to maintain the financial stability I’ve fought so hard to establish.
The best part of doing this for the past 5 years is that it’s automatic and now something I look forward to doing. My Monday/Friday updates take about 10 minutes and my 25th of the month showdowns a mere 25. To me, those 45 minutes each week are completely worth it.
An added advantage of my routine is that in establishing and keeping up with it, I’ve developed some pretty sweet financial habits. My routine has effectively set the stage for a healthy financial awareness as well as an increased desire to pay off debt, bring in extra income, enjoy my money, and save for my future. Not bad for 45 minutes a week, eh?
Do you have a financial routine? If so, what is it?
It's interesting to talk about routines and financial awareness – you wouldn't think they'd link together so strongly in both directions (ie you and your tracking, or the person *blush* that used to stop at starbucks EVERY MORNING on her way to work)Since you asked, I don't have a routine with my tracking, and I'm beginning to think that maybe I should. Not because I don't track, but because I track ALL THE TIME. Setting aside specific times to tally it all up seems like a good way to keep from getting too obsessed.
My routine isn't as precise as yours but I do have one and I am all for setting up some form of routine. Especially when it comes to tracking your spending and saving and attaining your goals.
@Taylor–what you've mentioned in your second paragraph is the reason why I decided to set a schedule for myself. I certainly didn't want to become too obsessed wtih the numbers. Also, I think the key word in your first paragraph is "used" as in USED to stop at Starbucks. Kudos to you for kicking that habit!@Rafiki–attaining goals is a huge part of maintaining my routine. It's funny how I've become a routine lover when it comes to my finances but I couldn't be farther from that in other areas of life.
I'm also a former spendaholic (I'm still a natural "spender" but I'm actively controlling my addiction) and I keep a basic Word chart that I track all my spending on. I also set up a monthly budget – my "budget month" runs from the 15th-15th – and I just keep all the receipts from my spending in a spot in my wallet where they can't be missed and don't take them out until they're recorded.This way, I keep my spending in various budget categories in check.
My routine is very similar to what you describe, except I don't set monthly goals and I have less specific dates for doing the things. For example, I don't enter receipts on a specific date, but I enter them anywhere from 2-4 times a month depending on how big my pile has gotten. And I do my net worth on either the 31st or the 1st.
My routine is similar to what you describe. Hmm. I think you may have inspired me for a post!
My process is similar to yours except that I input my expenses into my spreadsheet every day. I know that's obsessive to some people, but I trust myself to keep up with receipts for a few hours at most, ha!