Building financial confidence
How this 15-minute meeting can change your relationship to money.
For over a decade, I’ve engaged in a weekly practice of running my numbers or, better put, a money meeting with myself. The money meeting is a Sunday ritual I started around the time I moved to New York City nearly 12 years ago. It was designed to help me feel in control of my money, even when times were lean. I sit down in front of my computer, with pen and paper in hand, and start by checking in on (and paying off) all my credit cards and then taking a peek at my bank account balances as well. It’s a process that takes all of 15 minutes to complete and ensures I’ll never be smacked in the mouth by an overdraft charge, miss a credit card bill or overspend due to ignorance.
To be fair, I love text and email alerts for transaction and balance updates across all my credit cards and bank accounts. This is also an excellent tool for early fraud detection. However, instead of entirely relying on technology, I like the ol’ pen and paper method for my weekly check-in.
I start the money meeting by writing down the names of all my credit cards and also write down the balances of my three checking accounts:
The joint checking account I have with my husband
“Bills” aka the account used to pay rent, insurance, utilities, cell phone, and medical bills
Personal aka the one I use for my own spending (think of it as where my “allowance” goes).
Then I log into all the accounts. I start with the credit cards and capture the outstanding balances of each one. I make sure to check recent transactions that may have not been added to the total yet and add those in myself just to have the real outstanding balance. Then I add up the outstanding balances. I always check all the cards, even the ones I’m not currently using, just to be on the lookout for fraudulent activity or perhaps an automated bill I may have forgotten about.
Once all the credit card balances have been written down, I then log into my bank accounts and write down the balances of my checking accounts. After that, I subtract the outstanding balances of my credit cards from the appropriate accounts. This gives me an accurate reflection of exactly how much I (and the household) have left to spend in the month. If it’s the first three weeks of the month, I also pay off my credit card balances right then. This helps keep my utilization ratio low, and means my checking account will be updated to show me the remainder of the monthly budget. If it’s the week before my credit card statement will process, then I wait in order to have a balance, but I pay it off as soon as the credit card bill is available. That means I never carry a balance (aka I never have credit card debt) and never have to pay interest.
This practice has remained largely a solo venture, despite being married. Instead of inviting Peach, my husband, into the weekly number crunching, we typically chat monthly about where everything stands (or rather I update him about the results of the money meeting!). Then a few times a year we have a longer talk to assess our progress towards goals and if those goals are still serving us.
Peach does have access to all my money spreadsheets – which is essential. Both parts of a couple need to be able to function as the Chief Financial Officer of the household.
Should this concept of weekly money meetings sound stressful, consider this: In 15 minutes of time, I ensured my financial house was in order. You can’t make an action plan without all the information, which includes consistently facing your numbers. It also guarantees I won’t fall victim to overspending simply because I forgot how many purchases got financed on a credit card early in the month. Getting intimate with your cash flow sets you free from financial worry.
What you missed in last week’s Friday newsletter…
A frank discussion about “easy” passive income.
Disclosing real numbers about my passive income streams.
An inside look at the book publishing industry including advances and royalties.
I do something very similar once a week and I can attest to it being time well spent. Cheers!