5 Areas To Check During Your Monthly Financial Review

financial review

If you are serious about getting unstuck with your finances and creating generational wealth, you need to make time for it.  People can say what is important to them, but you will know the truth by:

  1. How they spend their money
  2. How they spend their time.

Despite what is going on, people make time for what is important to them.  This goes for everything.  If health is important, then you will likely spend money on nutrition and fitness.  You will also dedicate time to the gym regularly.

Since creating wealth is important to you, (or you wouldn’t be reading this article), you must make time to review your finances.  You should review your finances at least once a month.  If you are a couple, then you and your partner should have a joint meeting to review together.

There are several things you can do during your monthly financial review, but here are 5 areas you should review and discuss every month.

Your Financial Goals

Review your financial goals at least once a month so they stay at the forefront of your mind.  If you do not consistently review them, you can easily get off track.  To review your financial goals, they must be written down. It is not good enough to just have them in your head.  You must write them down.

You should have a range of financial goals to include short, mid, and long-term goals.  Review them to ensure that these goals are still consistent with where you want to go and reinforce your ‘Why’ – the reason you created the goal in the first place.

Actual Spending Versus Your Spending Plan

Review your actual spending by looking over your monthly bank or credit card statements.  Compare your actual spending to your spending plan to determine if there were any variances in the plan.  If there were significant changes from your plan, understand why it occurred.  Ask yourself the following:

  • Did an expense cost more than what was planned? If yes, can this be planned for in the future?
  • Was there an impulse purchase(s)? If yes, what was the spending trigger? How can you avoid next time?
  • Did an expense cost less than what was budgeted for?
  • Did you exceed the plan this month or just adjusted the money within your budget?

Your Bank and Credit Card Statements For Errors or Fees

As you are reviewing your bank and financial statements, check for errors such as duplicate or unfamiliar transactions.  Also, ensure that you are not charged fees incorrectly.  Too often, people rely on technology to alert them of errors, but sometimes an old fashion review will spot errors that the system that was correct. This is why you must periodically check your statements for errors.

No one or nothing cares about your money, more than you do.

For example, you may be charged twice for a transaction by mistake or a disputed transaction may appear back on your statement.

This happened to me recently when I disputed a charge for services not performed.  Because the app already had my credit card on file they automatically charged my account.  Within a month of the dispute, the transaction reappeared on my statement.  I immediately called the company to find out why and they corrected it.  However, if I was not aware of the transactions that I should be charged, this could have easily been an expense that would have paid.

Pay attention to how you are spending your money and what is being charged to your account.

This way unfamiliar transactions are easily identified.

Automatic Transfers

When it comes to technology, trust, but verify that your transactions are processed accurately.  Typically, you can set up an automatic transfer from your employer to specific bank accounts or automatic transfer from your bank to separate accounts.

Know what day you planned for the transfer to occur and make sure that the money made it to the right account.  You should also validate automatic bill pays as well.  If a vendor is automatically debiting your account to pay for a monthly service, make sure the bill is aligned to what you expected.  A good example of this would be an automatic bill payment for your utilities or cable/internet service. Ensure that the cost was only processed once and for the right amount.

Technology is great, but do not surrender to it 100 percent.

You can easily validate all your transactions by using online software/applications such as Mint or Personal Capital.  These tools allow you to view all your accounts and transactions in seconds.

Planned Activities For Next Month

After you have reviewed your transaction history, it is time to look forward and prepare for the next month.  The great thing about your spending plan is that you can choose where to allocate your funding.  Every month your plan can look slightly different depending on what is happening the next month.  The key is to prioritize your financial goals first, then allocate the discretionary funding accordingly.

For example, if you have a birthday celebration that you plan to attend and you want to  purchase a gift, include that in your spend plan now.  That may require you to use less money for entertainment or some other budget line, but it keeps you in line with your overall plan.

The same logic applies if you will have additional income that month.  If you anticipate receiving a lump sum either from a performance bonus or tax refund, plan for that in advance as well.  Additional funding should not be a surprise.  Your written financial goals will determine where the additional funding should be allocated in your budget.

Conclusion

When I was in the Army, I used to hear this commercial all the time saying, “What Get’s Checked, Gets Done.”  This is similar with your finances as well.

When you ‘check’ your finances, your goals get done.

Too often we shy away from looking at the funding, but in order for your financial situation to progress, you must understand how you performed last month, verify your transactions occurred as expected, and plan for your money in advance.

That’s getting your Finances On Point.

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