When someone says “I did my finances,” for a long time I had no idea what they meant. Did they balance their checkbook? Or perhaps they paid some bills. I would say in general this is what it meant. Years ago, it was balancing a checkbook or paying some bills. But today, I think “I did my finances” has an aged connotation and is begging for some modernization. I’m going to redefine it for the more technological, modern world we live in today.
“Doing your finances” means you took some time to know how much money you have. This is so much more than simply looking at your bank account amounts. If you’ve been reading Better Budget at all, you should understand now the importance of a budget. If you haven’t been reading it, well budget is in the name…so, it’s pretty important. When you do your finances, it’s really keeping your budget up-to-date. Keeping your budget up-to-date takes often work, but it literally pays off. The better you are with your budget, the more money you have in your pocket.
So, what does "I did my finances" mean for me? I use the envelope budgeting system and it’s pretty manual. When a transaction comes in my bank account, I also record it in the envelop budgeting app I have. So, doing my finances is pretty much syncing my bank account transaction list with my envelop budgeting transaction list. After this is done, I know exactly how much I have in each envelope. For example, if I had a $40 gas purchase in my bank account, I would then record a $40 gas purchase in my envelope budgeting app. Recording it in the app also requires me to take it out of an envelope. So, if I had $50 in the gas envelope, I would take $40 out of it. Now I know how much money I have, e.g. $10 left in gas.
Knowing how much money you have, or “Doing your finances”, also includes updating your budget when you get paid. I do my budget cycles weekly, which I highly recommend. So, every Friday (actually today after this blog post) I refresh my envelopes. I add the weekly budgeted amount to the appropriate envelopes. Then, if I have any extra money left over (say my wife worked some extra hours or we under-spent in an envelope), I then allocate the extra. I first allocate it to envelopes that we over spent, which is usually the coffee budget. If all those envelopes are good, then I’ll give my wife and I some extra spending money, invest it, or simply save it.
How often should you do your finances? I would recommend every 2-3 days, or after a lot of purchases. It takes me 10-15 minutes to completely go through my finances. The more often you do your finances, the less time it will take you to complete your finances for two reasons. 1) You get better at it, so you’ll finish it quicker. 2) You won’t have as much finances to review (e.g. if you do it every week, you’ll have a week of finances to review, versus just a day or two). If you have a big shopping day, I would go home that evening and do your finances. I always do our finances after going to the mall and buying a lot of things for two reasons. 1) To know if we overspent in any envelopes and return items if so. 2) To know how much left we have to spend.
So, “Doing your finances” means you took some time to know how much money you have and you do your finances every 2-3 days. Simple.
Thanks for reading the Better Budget blog! Doing your finances is tough, but it’s something you can create a habit of. Once it’s a habit, it’s easy. If you need help getting started with your finances, don’t be afraid to reach out to me. I’m here to help!
Better Budget Co
Your guide to all things personal finance. We're big fans of goal getting budgets, debt fee living, and a good cappuccino.
My name is Corey and I have a passion for budgets and personal financing. I can talk about it for days (weirdly enough). Hope you enjoy the blog!
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