It’s already the beginning of a new month, and it’s hard to believe how fast this year is going despite everything going on in the world! If you’re like me, the promise of a new month (and new quarter!) is so refreshing. I love reflecting on the last month and setting goals and intentions for the month ahead.
At the end of every month I do two things:
1) write out things I was grateful for that happened over the course of the month
2) do a end of month money review
What is a month end money review?
It’s essentially a review of your finances for the month, including all income you earned and expenses you had. It’s not a difficult process, but it does take some time. Once you have the process down though, you should be able to repeat each month with less time and effort. Also - the pay off is worth it! For me, once I’ve seen what we’ve spent our money on and how close we were to our goals I can make adjustments for the next month.
Here’s how to conduct a month end money review:
1) Go through your transactions for the month and make sure everything is accounted for.
You can do this process manually (by going through each of your bank/credit card statements!) or review on a software such as Mint (which is what we use) One note of advice: Make sure if your accounts are linked up in Mint (or similar software!) that you check to make sure they are ACTUALLY CONNECTED! Unfortunately I learned this lesson the hard way this month as one of our lesser used credit cards hadn’t been syncing since April. Whoops!
2) Once you’ve double checked nothing is missing, tally up the expenditures for each spending category.
Examples include: dining out, groceries, alcohol and bars, shopping, etc. If you’re using a software like Mint, the categories should automatically fill, however, you will need to double check that your transactions are categorized correctly. For example, a lot of my husband’s fantasy football expenditures show up as business expenses for me, which is obviously not accurate!
3) Take a look at and tally up your take home pay for the month.
This should be your net income, aka the money you have in your account after your employer takes out all taxes and deductions. Don’t forget any side hustles or other sources of income you may have!
4) Subtract all of your fixed expenses from your income.
This includes your mortgage/rent, any bills that are the same amount each month or are always taken out each month (such as your energy bill) and any credit card/loan payments you make (such as student loan or car payments)
5) Start subtracting your discretionary spending categories from your the amount you had left in #4.
Make sure that if there is an expenditure that didn’t fit into a certain category that it gets labeled miscellaneous and is counted toward your total spending for the month.
6) Once completed with #5, notice if you came up in the black (surplus!) or in the red (shortage!)
If you’re in the red, then it’s time to evaluate which categories you overspent on and where you need to reign it in for the next month. If you’re in the black, hooray! Give yourself a pat on the back for not spending more than you earned for the month.
7) With this awareness, make a plan for the next month.
Now that you’ve seen how much you earned, how much you spent, and what you spent your money on, it’s time to make a plan for the next month! Are there areas you need to cut back on? Are there any expenses you can cut out completely? Do you need to hustle a bit more this next month in order to make enough money to cover your expenses? Remember: “a goal without a plan is just a wish”
Although you can certainly write this all out, I love using both Mint to track and categorize expenses and Google Sheets to enter in all of our date (income, fixed expenses, variable expenses, totals, etc.) By using a spreadsheet software such as Microsoft Excel or Google Sheets you can compute the calculations right inside the spreadsheet. Another bonus is after a few months you can compute averages for different spending categories and then update your budget to more accurately reflect how and where you are spending your money.
And that my friends is how to conduct a month end money review! If you’re still feeling lost on how to start this process, send an email to info@katieoelker.com with the subject line “help please!” and I’ll be happy to answer any questions you have or see how I may be able to help you get started!
Until next time….
Cheers to your abundance!
Katie O.
