An exploration of money, mindset and a meaningful life
My Monthly Review Process

My Budget Review Process

Do you have a regular date with your money?

One of my often-repeated tips for managing your money is to make looking at your money a regular habit in your life. It doesn’t mean spending a lot of time on it, or stressing yourself out about it. But it does mean putting an appointment in your diary and keeping that commitment. It doesn’t matter whether you do it weekly, fortnightly, monthly or even quarterly. What matters is that you have a consistent budget review process.

My personal preference is to do it monthly. I think that’s mostly because I’ve always been paid on a monthly basis. Now that I have my own business, I choose to pay myself on that same cycle. You might prefer a different time period, for whatever reason, and that is totally fine. You can take what you read here and adapt it to a process that works best for you.

While I call this a budget review process, one of the benefits of looking at my money regularly is that I can then be proactive with how I want to spend in the future. It’s about having visibility and awareness in order to make adjustments where needed.

So, let’s dive into my full monthly budget review process.

Step 1: Open my Budget Spreadsheet

I call it a budget, but actually it’s a bit more than that. It has a calculation of net worth, a central point for details of our insurances, estate planning, our projected budget, a review of transactions and a portfolio tool.

I know that not everyone loves spreadsheets, but I still haven’t found an app or any other system that does the job better than this spreadsheet. I also created myself (#nerd), so it doesn’t require a monthly subscription fee – cha-ching! If you really don’t like spreadsheets, you could try software like You Need A Budget (YNAB), Xero (yes, even for personal finances) or something similar.

If you’d like a copy of my template, click here and you can download it for free.

Step 2: Update Net Worth

The next step is to update my net worth figures. For this, I usually have my phone handy with online banking and investment apps ready to go. First I update bank account balances, outstanding loan value for our mortgage, the value of our investments and finally my business. I don’t update my super every month because I don’t have online access. Instead, I do it quarterly, the month after I get sent my statement. You choose whatever is right for you.

Step 3: Track Expenses

The first part of this is to download a transaction report from your online banking for each account that you want to analyse. Usually, this will be your main transaction account and perhaps a credit card account, if you have one. You could technically also do this with a paper statement if you don’t have online banking, but it will likely take you much longer. You could also use an app like Money Brilliant or Pocketbook if you’re spreadsheet-phobic or just don’t want to bother categorizing them yourself.

Once I’ve downloaded my transactions, I delete anything outside the period of time that I am looking at and then categorize them. This is easier than you think and the more you do it the quicker it will become. I have a set list of categories that correspond to my budget, which is yet another benefit of doing this manually.

I then create a simple pivot table to give me an overview of how much we have spent in each category. This way I can compare this to what is in our budget and see how we are tracking in each category. For some expenses, the values may not fluctuate but knowing the figures for variable or discretionary expenses is really helpful. For example, one of our goals is to spend less on grocery shopping, so seeing how much we spent over the month is useful to see whether we’re making progress or need to make adjustments.

Remember, when reviewing your expenses you need to make sure that you look at it the figures objectively. Beating yourself up and feeling guilty and terrible about how you’ve spent is neither the goal of this exercise nor a very effective way to change your behaviour.

Step 4: Update Budget

This step isn’t always necessary unless you’ve had any changes to your regular income or expenses. For example, I found out the other day that our internet bill is going up by $6 per month and our grocery spending is getting consistently lower, so I will adjust those numbers and see how that affects our savings.

In more normal times I go months without adjusting our budget, but in the year of COVID19 things have been a bit different.

Step 5: Review Goals

I have a comprehensive goal setting and review practice for achieving long-term life and financial goals, which you can read about here. But for my monthly budget review process I only focus on short-term goals. The idea is to get a feel for how we are tracking to achieve our goals for the year – and adjust if necessary.

Normally I wouldn’t adjust goals throughout the year, but we’ve had to revise our goals (and expectations) because, well, COVID! As well as my husband being stood down and then going back at reduced days, my business income is also variable.

At the beginning of the year, we had a goal to make a set dollar value in additional repayments towards our mortgage and to invest a certain dollar value into our portfolio. We have revised that to simply “replenish our emergency savings account back to 12 months’ cost of living”. So each month I look at how much we’ve been able to save and how we’re tracking towards meeting that goal.

Creating the Habit

Writing this out in this format makes the budget review process seem like quite a big deal, but it honestly takes me no more than about 30 minutes. Once you get into the habit of doing it, you will find it easier and easier.

Remember to bring an energy of lightness to this practice. The purpose of it is to create awareness, to get curious and to learn and improve. It doesn’t have to be scary or intimidating. In fact, it can be very empowering and give you a sense of optimism.