Taking time to review your finances each month is a really important step towards reaching big savings goals and feeling in control of your money. Before I started to do this regularly, I struggled at the end of every month to figure out what the heck I was doing with my finances. As a result, I wasn’t seeing very much progress and money felt discouraging and hard to navigate.
When I first started making money, there was about a year where I had a budget that I loosely followed, but if I knew that I overspent, I ignored it and started fresh the next month. I never actually took the time to look at it. I just decided to start over every month and avoided keeping track of purchases I felt bad about. If I didn’t track it.. It didn’t happen. Right?
Looking back, I left thousands of dollars on the table, and I regret it. If i had been a little more honest with myself and actually took a few minutes each week to monitor where I stood, I’d be in a much better place than I am right now.
Over the past 2 years, I’ve developed my own system that I follow every month to effectively audit my finances and plan for the upcoming month. It takes 20 minutes, and it leaves me feeling motivated, inspired, and ready to tackle the month ahead.
So, if you’re ready to start incorporating monthly reviews into your financial routine because you want to start seeing real progress, here’s exactly what you need to do!
How to Review Your Finances Each Month
Evaluate Where You Land
This is where you need to update all your numbers. Ideally, you would be doing this in a nice spreadsheet like The Personal Finance Dashboard, but if you aren’t a spreadsheet person an app or a journal will work just fine.
Make sure you go through your credit card statements and track all of your expenses, as well as your income for the month. Don’t forget to move your money into your savings and investments and update your net worth! This is also a great time to check in on your accounts and ensure nothing looks weird or out of place, as well as pay your bills if you haven’t done so already.
Take a few minutes to look at your numbers and reflect on where you spent your money and the progress you’ve made. Are you happy with where you spent your money? Are you proud of your progress? Is there an area where you aren’t proud of the amount of money you spent?
This is also where you will need to take a look at the plan you set out of the month (if you had one… ) and see how you stacked up. Did you stick to the plan, and if not, why? Which areas did you over or underspend, and was it in your control?
Self-reflection is critical for staying in tune with your finances. Going through this process and being honest with yourself is how you will ultimately start to change your behavior over time.
Make the Adjustments
Identify where you veered from your plan and make adjustments for the month ahead. Consider if you have any expected purchases or plans coming up, and make sure you build those in! This could involve reducing money in one area of your budget to fund another, or amping up your savings if you know it’s going to be a lower-spend month.
Making adjustments is the most important process of the follow-up. This is how you build a budget that fits your lifestyle and that you can actually stick to.
Personal finance is 10% strategy, and 90% behavior. Adding a monthly review into your financial routine is how you combine strategy with changing behavior, and it will change your life. So for next month, make sure you take some time to review your finances and follow these steps!